New Mexico Educational Retirement Board (NMERB) has committed $150 million to distressed debt and equity firm Lone Star Funds‘ latest vehicle and has said it is interested in acquiring secondaries stakes in the fund.
Dallas-based Lone Star held a final close on its 10th flagship fund, Lone Star Fund X (LSF) X on $5.6 billion, according to a statement last Tuesday. The fund was raised through two different vehicles – LSF X (US) and LSF X (Bermuda) – and was targeting $5 billion. The $5.6 billion figure includes a GP commitment and an anticipated co-investment from associated entities, according to the statement.
NMERB’s investment committee granted staff discretion to invest an additional amount up to $10 million in fund interests if other limited partners were to decide to sell their stakes, according to an investment committee meeting agenda from 25 August.
Other LPs in LSF X include Chicago Policemen’s Annuity & Benefits Fund, Teacher Retirement System of Texas and Los Angeles Fire & Police Pension System, according to PEI data.
NMERB had committed $100 million to the fund’s predecessor, LSF IX, according to PEI data.
LSF X has a varied strategy, targeting private equity control investments in companies; single-family residential real estate secured debt, corporate debt and consumer debt; and single-family residential real estate assets, among others, according to the meeting agenda. The fund will invest across North America, Latin America, Europe and Asia-Pacific, the pension’s document noted, adding that it is targeting a gross internal rate of return of 25 percent.
According to Lone Star’s website, LSF IX, closed on $7.2 billion in June 2014 and followed a similar diversified strategy. The NMERB document also indicated LSF IX was generating an IRR of 11 percent, LSF VIII 27 percent and LSF VII 50 percent, without specifying whether the IRR figures were net or gross of all costs.
Two separate filings with the US Securities and Exchange Commission on 12 October indicated the US vehicle had 89 investors and the Bermuda vehicle 38 investors at the time. LSF X had raised $4.5 billion by that point, the filings showed.
Lone Star has offices in New York, Amsterdam, Frankfurt, London, Madrid, Paris, Hong Kong, Singapore, Tokyo and Hamilton, Bermuda, in addition to its headquarters. Since its first fund launched in 1995, the firm has raised more than $65 billion through 16 private equity funds, according to its website.
A Lone Star spokeswoman was not immediately available to comment.