Montana pension commits to Asian direct lending fund

The $10bn pension backed a direct lending fund managed by OCP Asia with a $30m commitment.

The Montana Board of Investments approved a $30 million commitment to the Orchard Landmark II fund last week (16 August), according to a report on its website.

Orchard Landmark II is an Asia-focused direct lending fund managed by OCP Asia that was launched in 2015. The fund has also garnered a commitment from the Orange County Employee Retirement System (OCERS).

According to minutes of a June 2014 OCERS investment subcommittee meeting, the previous iteration of the Orchard Landmark direct lending fund targeted companies with between $25 million and $150 million in EBITDA and garnered return through equity, interest payments, participation fees and prepayment penalty fees. That fund was structured so that no one investment could constitute more than 10 percent of the total fund, according to the minutes.

OCERS was also an investor in the previous fund in the series. In an October 2014 memo on a $60 million commitment to that fund, chief investment officer Gerard Miller expressed confidence in the firm and its strategy.

“This investment strategy and product structure could serve as a worthwhile candidate to serve as an 'income-producing surrogate parking lot' for undeployed private equity investments, given its return profile and the staggered maturities that we will be building here,” he wrote. “Instead of over-allocating to public market equities as a surrogate for undeployed private equity commitments, this fund may provide superior risk-return characteristics,” he added.

OCP Asia is a credit-orientated investment fund manager with $1.1 billion in assets under management founded in 2009 as a spin-out from Stark Investments. The firm is based in Hong Kong and also maintains an office in Singapore.

In July, PDI reported that OCP's Pan-Asian open ended credit fund had raised approximately $850 million and plans to add up to $300 million in additional capital by the end of 2016.