Global credit funds & CLO's
February 2020
| Issue 220
Published in London & New York.
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February 2020
|
Issue 220
News
Pimco plans to outperform come rain or shine with $4.5bn all-weather fund
Michelle D’Souza
Reporter
Pimco has become the latest manager to fashion a flexible, all weather credit fund that invests across public and private markets, geographies and capital structures. The Newport Beach-based manager is hoping to raise $3 billion for the strategy. With half a turn of leverage, it could have up to $4.5 billion to deploy.
It is understood that Pimco is targeting a first close later this month and a final close in December for the fund, which it is calling Pimco Credit Opportunities Fund III.

The vehicle will invest across four strategies: capital solutions, stressed, distressed and idiosyncratic opportunities (which the firm describes as opportunities that seek to capitalise on orphaned and dislocated issues along with select equity investments).

The strategy is like that of Crestline’s new special situations fund, which is targeting $1.5 billion. That fund can invest across three strategies: asset-based lending, corporate direct lending and special situations.

Pimco’s fund will make 45-60 investments with transactions ranging between $20 million and $200 million. It is anticipated that its portfolio will compromise 60% secured debt, 25% unsecured debt and 15% equity. Around half of opportunities will be originated in the primary market in private transactions. The remainder will be from the secondary market.

The fixed income giant is targeting 15% returns and a 1.5-1.7 times net total-value-paid-in multiple with Credit Opportunities III. The fund will be managed by the firm’s special situations team. It has an initial seven year-life with optional two-year extensions. Creditflux understands that the fund has received $250 million from Allianz, Pimco’s parent company.
Pimco’s fundraising target for this, its third vintage fund, is ambitious. Its first fund in the strategy, Pimco Distressed Credit Fund, launched in 2010 at $220 million. The next, Pimco Corporate Opportunities II, closed in 2016 at $1.5 billion. As of 30 September that fund had invested $2.11 billion across 58 core positions. Of those, 32 were in private transactions. It had generated an 11% IRR.

The manager is offering a 20 basis points discount on the management fee for investors that make a commitment before the fund’s first close, as well as discounts for investors that commit $100 million or more.
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