The Louisiana State Employees’ Retirement System (LASERS) committed $75 million to GoldenTree Asset Management’s latest distressed debt vehicle, which comes amid positive fundraising trends for funds investing in troubled companies.
The Baton Rouge-based pension plan’s allocation to GoldenTree Distressed Fund III is LASERS’ first commitment to the credit manager. LASERS has additionally made distressed debt investments with Siguler Guff & Company and Marathon Asset Management.
New York-based GoldenTree is targeting $1.75 billion-$2 billion and has raised $599.5 million for Fund III, according to Securities and Exchange Commission regulatory filings. It will target distressed debt opportunities in North America and Europe, according to February meeting minutes for the San Antonio Fire and Police Pension Fund, which committed $20 million to the strategy.
The firm’s previous fund, GoldenTree Distressed Fund 2014 (Fund II), had a target of $1.2 billion and raised at least $900 million, according to February 2015 meeting minutes from the City of Chattanooga General Pension Plan.
Fund II sought to generate a mid- to high-teens net internal rate of return and charged a 20 percent carried interest fee over an 8 percent hurdle. The fund’s management fee stood at 1.5 percent, the Chattanooga documents showed.
Among other investors, the Boston Retirement System committed $25 million in the vehicle, while the New Jersey Division of Investment committed $300 million to a separate account that invested alongside Fund II. Terms for that vehicle included a 0.75 percent management fee on invested capital and a 17 percent carried interest charge over an 8 percent hurdle.
Special situations and distressed debt vehicles face a favourable fundraising environment, as they continue to make up a larger portion of all private credit capital raised. Through the first six months of the year, distressed funds made up 33 percent of the total money raised for all debt strategies. In 2017, that number stood at 32 percent, up from 2016’s 26 percent – also an increase from 2015’s 20 percent.