Oregon slashes re-up to Centerbridge by $100m

The $65bn pension system will look for key term changes during final negotiations, including cutting management fees and setting a ‘reasonable cap on organisation costs of the fund’.

The Oregon Investment Council cut in half its re-up with Centerbridge Partners this week, committing $100 million to the firm’s $3.75 billion second fund.

OIC, which manages about $65 billion in pension assets, committed $200 million to the firm’s $3 billion debut fund, which closed in 2006.

Despite council approval, the pension will continue to negotiate on final terms and conditions. OIC will look to “tighten the conditions on commencement of the commitment period”, as well as reduce management fees and establish a “reasonable” cap on fund costs, the pension said.

“Since its formation, Centerbridge has grown into a robust, multi-strategy firm, with 90 employees, including 34 investment professionals and over $11 billion in assets under management,” Oregon’s investment staff said in pension documents.

The pension is cutting its commitment to Centerbridge “based solely on the need to manage [the pension’s] overall private equity allocation”, the pension said.

The firm, launched in 2005 by Jeff Aronson, formerly of Angelo Gordon, and Mark Gallogy, formerly of The Blackstone Group, hired Maryfrances Metrick from Blackstone in August to help with raising Fund II.

Centerbridge also has retained Blackstone affiliate Park Hill Group as placement agent for the fund.

Oregon touted the performance of Fund I, which it says has produced “strong, first-quartile results”. Fund I was generating a net internal rate of return of 22.7 percent, and a net total value multiple of 1.28x, according to Oregon’s data as of 31 March, 2010.

Centerbridge II will focus on investments of $50 million to $300 million in North America. The firm’s strategy is “economic-cycle agnostic, allowing the team to focus on buyouts, corporate partnerships, recapitalisations and build-ups during times of economic expansion, and distressed debt opportunities, with an eye toward gaining control, during economic slowdowns and periods of market instability”, the pension said.

Centerbridge has deployed about two-thirds of invested capital in distressed debt opportunities, and one-third into private equity partnerships, the pension said.