PIMCO targets $1bn for its latest credit fund

The vehicle looks to deploy capital across real estate, specialty finance and corporate credit strategies.

PIMCO is raising a new credit fund that will divide its capital across four different strategies.

The Newport Beach, California-based investment manager is targeting $1 billion for its PIMCO Private Income Fund. The fund will lend through four different strategies including residential and corporate real estate, specialty finance and corporate credit, according to meeting documents from the New Mexico State Investment Council.

The documents outlined that the fund is looking to target 25 to 45 percent of its allocation to residential real estate lending, 25 to 45 percent to specialty finance, 10 to 30 percent for corporate real estate lending, and 10 to 30 percent for corporate lending.

The fund is targeting net returns between 8 and 12 percent and expects to close during the first quarter of 2019. The fund has a two-year lockup period with an annual option for withdrawal.

The vehicle plans to use various investment strategies including repurchasing agreements, subscription lines and securitization to leverage loans and assets. The vehicle is targeting to use approximately 1.5x leverage with a max of 2x leverage, according to the meeting minutes.

The fund will have a management fee of 1.25 percent and an administrative fee of .25 percent. The documents did not specify if these were annual or quarterly fees. The fund will have an incentive fee of 12.5 percent with a hurdle rate of 5 percent.

The New Mexico SIC have recommended a $200 million commitment to the fun, which is to be decided at today’s meeting. The San Mateo County Employees Retirement Association made a $40 million commitment to the fund in December.

The firm was unable to be reached for comment by press time.

PIMCO was founded in 1971 and has more than $1.6 trillion in assets under management.