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Virginia pension fund backs Fortress’ Japan distress vehicle

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Virginia Retirement System (VRS) has committed to $50 million to Fortress Investment Group’s Japan Opportunity Fund II, a distress-focused vehicle that closed last December at its hard cap of JPY130 billion ($1.65 billion).

The allocation came out of VRS' real assets program. There was a further $299 million in private equity commitments, of which $200 million went to a global co-investment fund operated by HabourVest Partners. The largest allocation - $400 million - was for credit strategies.

VRS had $55.5 billion under management at the end of 2012. Of this, 8.4% was invested in private equity, 7.1% in private real estate and 0.5% in other real assets. Nearly half the private equity allocation is in buyout funds as of June 2012, with a further 12% in special situations, 11% in growth and 10% in venture capital.

The Japan Opportunity Fund II focuses on real estate-related debt and other assets in Japan, seeking to capitalize on the dynamics related to deleveraging by financial institutions and near-term debt maturities. When the final close was announced, the fund had already made 10 investments with approximately JPY30 billion of net invested capital. It is expected to be fully invested over the next 24 months.

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