The $65 billion Oregon Public Employees Retirement Fund is investing $500 million in Centerbridge Partners’ third credit fund, which is split between two vehicles.
New York and London-based Centerbridge is raising $5 billion, 25 percent of which will go toward its Centerbridge Special Credit Partners III while the remaining will be allocated to Special Credit Partners III-Flex vehicles. The firm, which began raising these funds earlier this year, plans to put the 25 percent portion to work immediately and leave the rest for a time when more distressed opportunities materialise.
The firm is raising the two funds as a “stapled offering,” according to the Oregon documents, with limited partners allocating 25 percent to the main fund and 75 percent to the flex fund. Investors have to subscribe to both portions, though the firm is waiving fees on the flex account until that money is put to work, PDI understands. The structure on this fund is new compared to its predecessors.
The Oregon Investment Council (OIC), which approved the commitment at an April board meeting, according to recently released minutes, is placing $125 million with fund III and $375 million with fund III-flex. The money is coming from Oregon’s private equity portfolio, which has previously invested $435 million in other Centerbridge funds.
The vehicle has garnered another commitment from the Montana State Board of Investments recently. The previous Centerbridge Special Credit Partners II fund closed on $2 billion in 2011. It gathered commitments from the California State Teachers Retirement System, the Massachusetts Pension Reserves Investment Management Board, the Montana Board of Investments, the State of Wisconsin Investment Board, the Alaska Permanent Fund and the New York State Common Retirement Fund, among others, according to PDI Research & Analytics.
Centerbridge has about $25 billion in assets under management. Its Capital Partners platform has raised about $14 billion across three funds focused on private equity, distressed for control and structured transactions. The credit funds focus on non-control distressed debt and have about $7 billion in credit hedge funds and two predecessor Special Credit Partners funds. The firm has managed the non-control distressed strategy sine the 1990’s, according to OIC documents.
“The funds offer OPERF an opportunity to participate in a differentiated portfolio of private equity investments with relatively attractive overall terms,” said the Oregon documents. “Staff and TorreyCove’s review of the firm and proposed fund commitments indicates that the potential returns available to PERF justify the corresponding investment risks,” the document continued. TorreyCove Capital Partners is Oregon’s private equity consultant.