Wisconsin bolsters debt portfolio with Q2 commitments

  • Centerbridge, GSO among Q2 commitments
  • Wisconsin commits to three co-invest deals
  • $102.1 bln pension also backs Inflexion, Providence, Vista

State of Wisconsin Investment Board in the second quarter inked $361.4 million of new commitments to private equity, more than half of which went to debt-related strategies.

The new commitments, disclosed in August 9-10 meeting materials, include $200 million to new debt funds managed by Centerbridge Partners and Blackstone Group’s credit arm, GSO Capital Partners.

Wisconsin allocated $100 million across two Centerbridge funds, Centerbridge Special Credit Partners III and Centerbridge Special Credit Partners III-Flex. The retirement system committed $30 million to the main fund for investments in non-control distressed-debt opportunities.

Wisconsin allocated the remaining $70 million to the flex fund, which Centerbridge will activate when more opportunities for distressed debt emerge. If distressed markets stay subdued, Centerbridge will cancel its LPs’ commitments to the flex fund. The firm set a combined target of $5 billion with a $6 billion hard cap for the funds.

“We think the credit cycle is approaching one of those inflection points you see every seven years or so,” Centerbridge co-founder Jeffrey Aronson told Oregon Investment Council in April. “We know we don’t know, so we’ve structured this fund with that in mind.”

Wisconsin also committed $100 million to GSO Capital Opportunities Fund III. GSO closed its third mezzanine fund on $4.2 billion in July, Chief Financial Officer Michael Chae said in a recent earnings call. It’s unclear whether this represented a final close. The firm declined to comment.

In addition to its commitments to debt strategies, Wisconsin committed $125 million to growth and buyout funds managed by Inflexion Private Equity PartnersProvidence Equity Partners and Vista Equity Partners, board documents show.

The system committed $50 million each to Providence Strategic Growth Partners II, targeting $600 million, and Vista Foundation Fund III, which is targeting $2 billion with a $2.5 billion hard cap.

Inflexion Enterprise Fund IV recently held a final close on 250 million pounds ($324.25 million) for investments in lower-middle-market U.K.-based companies. Wisconsin committed $25 million to the fund.

Wisconsin continues to be active as a co-investor as well, having allocated $36.4 million across three deals in Q2. Its co-investment portfolio was valued at $191 million as of June 30, according to board documents.

State of Wisconsin Investment Board manages $102.1 billion of assets, $94.2 billion of which belongs to state retirement funds. Wisconsin’s $6.1 billion PE portfolio delivered a 9.7 percent 10-year annualized return through June 30. Its private-debt portfolio, valued at $479 million, returned 8.4 percent.

Action Item: Wisconsin info: www.swib.state.wi.us