New Mexico PERA backs Garrison for up to $60 mln

Garrison Investment Group will use the fund to take non-control positions in middle-market companies by originating loans or acquiring debt on the secondary market, according to a redacted investment memo provided by New Mexico PERA. The fund’s assets could include consumer installment loans, commercial and industrial loans, distressed corporate workout loans and commercial real estate loans.

“Garrison’s edge is based on a concerted effort to occupy a small niche within the capital market ecosystem,” according to the memo. Large funds tend to compete over deals that require investments of $50 million or more. “This leaves Garrison competing with only regional and local investors for assets.”

The firm plans to charge investors a 1 percent management fee on committed capital and a 2 percent fee on funded capital, according to the memo. Fees received by Garrison “specifically in connection with an actual or a potential portfolio investment” will be used to offset the cost of the management fee.

The general partner will use a management fee offset to provide 1 percent of the fund’s investment capital.

The firm filed a Form D for Garrison Opportunity Fund IV A on April 16. The document indicates a $500 million offering amount with $55.6 million sold. The filing lists Brian Chase, Steven Stuart, Joseph Tansey and Julian Weldon as executive officers of the fund.

A separate SEC filing indicates the existence of a Garrison Opportunity Fund IV B but it is not clear if the firm treats it as a related or parallel vehicle.

The investment memo did not disclose a fund target. Executives at Garrison did not respond to requests for comment.

New Mexico PERA valued its investment fund at roughly $14.6 billion as of September 30, a total that included approximately $650 million in private equity assets. The retirement association holds a 4.5 percent allocation to private equity, below its 7 percent target.