Lone Star’s $5.6bn fund closes 22% below predecessor

Like others in the series, the new fund, which targeted $5bn and closed earlier this week, focuses on PE control investments, corporate and consumer debt, real estate and real estate debt.

Distressed debt and equity firm Lone Star Funds has held a final close on its 10th flagship fund, Lone Star Fund (LSF) X on $5.6 billion.

LSF X, which fundraised through two different vehicles – LSF X (US) and LSF X (Bermuda) – was originally targeting $5 billion. The $5.6 billion figure includes GP commitment and an anticipated co-investment from associated entities, the firm said in a statement on Tuesday.

LSF X has a varied strategy, targeting private equity control investments in companies; single-family residential real estate secured debt, corporate debt and consumer debt; and single-family residential real estate assets, among others, according to a New Mexico Educational Retirement Board (NMERB) investment committee meeting agenda from 25 August. The fund will invest across North America, Latin America, Europe and Asia-Pacific, the pension’s document noted, adding that it is targeting a gross internal rate of return of 25 percent.

According to Lone Star’s website, LSF IX, closed on $7.2 billion in June 2014 and followed a similar diversified strategy. The NMERB document also indicated LSF IX was generating an IRR of 11 percent, LSF VIII 27 percent and LSF VII 50 percent, without specifying whether the IRR figures were net or gross of all costs.

Two separate filings with the Securities and Exchange Commission on 12 October indicated the US vehicle had 89 investors and the Bermuda vehicle 38 investors at the time. LSF X had raised $4.5 billion by that point, the filings showed.

NMERB committed $150 million to LSF X, and had committed $100 million to its predecessor, LSF IX, according to PEI data. NMERB also noted in August that its investment committee granted staff discretion to invest an additional amount up to $10 million in secondaries fund interests if other limited partners were to decide to sell their stake. Other LPs in the latest fund include Chicago Policemen’s Annuity & Benefits Fund, Teacher Retirement System of Texas and Los Angeles Fire & Police Pension System, according to PEI data.

Headquartered in Dallas, Lone Star has offices in New York, Amsterdam, Frankfurt, London, Madrid, Paris, Hong Kong, Singapore, Tokyo and Hamilton, Bermuda. Since its first fund launched in 1995, the firm has raised over $65 billion through 16 private equity funds, according to its website.

A Lone Star spokeswoman was not immediately available to comment.