Lone Star closes Fund VIII on $5bn

The firm started marketing its eighth distressed investment fund last fall after closing its seventh investment vehicle in 2011.

Lone Star has closed its Fund VIII on $5 billion after less than a year in marketing, according to sources with knowledge of the fundraising. 

Lone Star did not return calls for comment. Bloomberg reported on the fund close earlier. 

The John Grayken-led firm launched its eighth distressed investment fund last fall, according to one source with knowledge of the firm. It held a first close on Fund VIII in March, the source said. The firm did not use a placement agent for the fundraising. Fund VIII targets distressed investments in loans and securities, including single family residential, corporate and consumer debt products and financially oriented and asset rich operating companies, according to a description from Oregon Public Employees’ Retirement Fund investment staff, an LP in the fund.

Lone Star closed its seventh distressed fund in 2011 on $4.6 billion. The firm had raised Fund VII simultaneously with its second real estate-focused vehicle, which closed in 2011 on $5.5 billion. 

The firm has not yet launched its third real estate fund, though that should begin marketing later this year, sources said. 

Earlier this year, Lone Star received a $125 million commitment from the New Mexico Educational Retirement Board, one of the firm’s existing LPs. “We like their capabilities in the distressed marketplace,” Bob Jacksha, chief investment officer with the board, told Private Equity International in a prior interview. 

Last month, the Oregon Investment Board authorised a commitment of $400 million to Lone Star, adding to its long-standing relationship with the firm. Lone Star is Oregon’s largest real estate manager relationships, according to documents from the investment board meeting.