Michigan commits to GSO, Denham

The University of Michigan unveiled investments in two recently closed vehicles at its meeting Thursday in addition to a $30m commitment to Stone Tower Capital, which was recently acquired by Apollo Global Management.

The University of Michigan announced commitments to three alternative funds at its meeting Thursday, including $40 million to recently closed GSO Capital Opportunities Fund II, according to documents released by the endowment.

GSO, a debt shop affiliated with The Blackstone Group, closed its second capital opportunities fund on $4 billion in March. The firm launched the fund in 2010 and has already deployed $1.1 billion. 

The firm’s investment strategy will take advantage of dislocations in global credit markets, particularly in Europe. GSO has already provided financing to Sony for its acquisition of EMI Group's publishing unit, the firm said. 

The University, which committed to Fund II in December, has committed $70 million to previous GSO Capital Partners funds, according to documents. Fund II’s predecessor was generating a 13.7 percent net internal rate of return and a 1.1x return multiple as of 30 September, according to the California Public Employees’ Retirement System

In addition to GSO, the University of Michigan also committed $20 million to Denham Commodity Partners Fund VI in February. Denham reportedly closed the fund on $3 billion in early April. Fund VI will invest in the oil and gas; industry, metal and mining as well as power and renewables, according to University documents. 

Michigan’s $7.8 billion endowment also committed $30 million to Stone Tower Structured Credit Recovery Fund II, a structured credit fund that will invest in collateralised loan obligations, collateralised debt obligations, residential mortgage-backed securities and commercial mortgage backed-securities. Stone Tower Capital, which has around $18 billion in assets under management, was acquired by Apollo Global Management earlier this year. 

The University of Michigan has 15.6 percent of its assets, $1.2 billion, committed to private equity. The endowment has a 52 percent overall allocation to alternative assets as of 31 March.