Louisiana Teachers commits $75m to Castlelake V

The Minneapolis-based firm has a $2bn target for its fifth distressed debt vehicle.

The Teachers Retirement System of Louisiana approved a $75 million commitment to Castlelake’s latest distressed debt fund during its board meeting on Thursday, a pension plan spokeswoman told Private Debt Investor.

The Minneapolis-based firm has set a $2 billion fundraising target for its fifth distressed debt vehicle, launched this May, according to a fund presentation made to TRSL. Castlelake V is targeting 115 to 125 investments ranging from $15 million to $20 million with an expected hold period of one-and-a-half to three years. 

Castlelake V targets opportunistic investments backed by European and US assets, including in the aviation industry and emerging markets.

The fund seeks control investments in smaller deals to capitalise on “limited competition due to increased deal complexity in smaller industry segments”, the document read. 

TRSL’s commitment to the fund falls under its private market debt bucket, the spokeswoman added. That portfolio category held $1.04 billion in assets of its $18.5 billion in total assets as of 31 May, according to its website.

The private debt group showed 17.8 percent and 9.58 percent returns net of fees the one-year and five-year periods ending 31 May, respectively.  

The pension plan had previously committed to Castlelake IV, according to PDI data. That 2015-vintage fund raised $1.92 billion and showed a 32.3 percent net internal rate of return as of 31 December, according to the presentation slides. The 2014-vintage Castlelake III raised $1.42 billion and had a 12.8 percent net IRR at the end of last year.

TRSL’s chief investment officer was not immediately available to comment further about the commitment. Castlelake did not respond to a request for comment.

Castlelake was founded as TPG Credit Management in 2005, then in partnership with TPG Capital. In 2016, three years after changing its name, Castlelake bought out TPG’s remaining minority stake. The firm had $10 billion in assets under management at the end of the first quarter, according to its website.