Distressed funds dominate Kentucky Retirement Systems commitments

  • Kentucky commits $100 mln across Black Diamond, Ares
  • Black Diamond targeting $1 bln to $1.5 bln
  • Ares to invest in “dislocated” assets

Black Diamond is targeting between $1 billion and $1.5 billion for its distressed for control fund, Peden said. Black Diamond, which also invests hedge funds, mezzanine funds and collateralized loan obligations, manages more than $8 billion of assets, according to its website. The firm did not respond to a request for comment.

Black Diamond’s previous fund, a $750 million 2011 vintage, generated a 12.9 percent IRR and 1.21x multiple as of June 30, according to Oregon Public Employees Retirement Fund documents.

Ares Management set a $1 billion target and $1.5 billion hard-cap for its fourth special situations fund, which it will invest in “dislocated and out-of-favor assets” such as first- and second-lien bank loans, high-yield bonds and other securities, according to New Mexico State Investment Council documents.

The firm’s third special situations fund netted a 15.86 percent IRR as of June 30, according to New Mexico Educational Retirement Board documents.

Kentucky’s $11.6 billion pension fund held a 10.1 percent allocation to private equity as of Oct. 31, according to an investment report. The state’s $4.1 billion insurance fund, which is also managed by the retirement systems staff, held a 6 percent allocation to the asset class as of the same date.