PIMCO is fast approaching the low end of its target for the multibillion BRAVO Fund III after locking down $750 million over the span of two months, PERE's sister publication, Private Debt Investor, reported Tuesday.
The Newport Beach, California-based asset management behemoth has closed on $2.25 billion for the special situations vehicle focused on real estate and specialty finance investments, according to US Securities and Exchange Commission regulatory filings.
That figure, up from the $1.53 billion raised as of March, puts the firm closer to the $3 billion-$4 billion target range. The fund has a hard-cap of $5 billion, according to documents from the New Mexico State Investment Council, which committed $100 million.
Before the third close two months ago, Fund III held an initial close of $820 million on 18 November, followed by a second close on an additional $380 million on 30 December. Investment focuses will include the residential and commercial real estate markets along with specialty finance companies.
Former closed-end PIMCO opportunistic funds include Distressed Mortgage Fund I and Fund II, Distressed Senior Credit Opportunities I, a TALF vehicle and the earlier two BRAVO funds. The $2.87 billion DMF I and $610 million DMF II posted net IRRs of 9.1 percent and $35.4 million. The $2.68 billion DiSCO I fund listed a 11 percent net IRR, while that figure for TALF was 34.3
percent. Using the mid-range target of $3.5 billion would make BRAVO III the third-largest closed-end PIMCO opportunistic fund.
Fund III, which carries a seven-year life with two possible one-year extensions, charges a management fee of 1.5 percent on invested capital and 20 percent for carried interest. It will target a net internal rate of return of 14-16 percent. Alongside the SIC allocation, the Teachers’ Retirement System of the State of Illinois committed $100 million and Arkansas Local Police and Fire Retirement System committed $10 million to Fund III.
The latest BRAVO vehicle’s predecessors, Fund I and Fund II, raised $2.35 billion and $5.5 billion, respectively. The 2011-vintage Fund I is distributing back its capital and achieved a 22.4 percent internal rate of return, as of 31 December, while 2013-vintage Fund II is still investing and has generated a 12.3 percent net IRR, also as of year-end 2016.
The investment mandates have shifted along with the economic landscape, as well. Fund I focused on non-performing loans and opportunities because of banks recapitalizing. The second vehicle focused on performing assets along with specialty finance.