PIMCO has collected enough capital to put it almost 90 percent of the way to its minimum target for the firm’s latest open-ended multi-strategy fund, according to California pension fund documents.
The Newport Beach, California-based financial behemoth has locked down $875.76 million for PIMCO Private Income Fund, which is seeking $1 billion-$1.5 billion, materials from the Ventura County Employees’ Retirement Assoication’s Monday meeting show. VCERA, which committed $30 million to the fund in March, approved a $25 million follow-on commitment.
PIMCO declined to comment.
The vehicle is an open-ended structure, giving its investors more liquidity than a locked-up fund, but PIF carries an initial two-year lock-up. It is targeting net internal rates of return of 8-12 percent with 6-7 percent of that coming from current income. It carries a 12.5 percent incentive fee over a 5 percent hurdle along with a 1.25 percent management fee.
In addition to VCERA, PIF has won commitments from the Anne Arundel County Retirement & Pension System ($25 million), the Metropolitan Employee Benefit System ($100 million), New Mexico State Investment Council ($200 million), San Mateo County Employees’ Retirement System ($40 million), the Santa Barbara County Employees’ Retirement System ($20 million) and Seattle City Employees Retirement System ($40 million), according to PDI data.
The vehicle will target residential real estate and commercial real estate debt as well as specialty finance and corporate credit investments. So far, the firm has seven positions in the fund.
There are four investments in real estate credit: three on the residential side – US re-performing mortgage loans and a pool of UK owner-occupied mortgage loans – and one on the commercial side, a first-lien mortgage for a close-to-completion New York hotel. In addition, three positions have been taken in specialty finance investments: financings for newly-originated consumer loans, credit card receivables and non-performing loans.
The vehicle has yet to make any corporate debt investments. An investment note from VCERA consultant NEPC notes that PIMCO is “cautious on the corporate lending space because of the amount of competition and the mature credit cycle”.
The opportunity may overlap with some of PIMCO’s other fund series, including the BRAVO locked-up vehicles, which consist of a $2.4 billion Fund I, $5.5 billion Fund II and $4.6 billion Fund III. PIFC may also overlap with the open-ended Tactical Opportunities Fund and the Global Credit Opportunity Fund, which have net assets of $2.8 billion and $3.9 billion, respectively.
PIMCO manages $1.88 trillion in assets across alternatives, core fixed income, exchange traded funds and interval funds, among others.