The $182 billion California Public Employees’ Retirement System last month committed  $150 million to the Carlyle Group’s latest venture, a financial services private equity fund.

According to an internal memo, Carlyle is raising its first financials services buyout fund, Global Financial Services Partners, to target distressed sellers and divisional carve-outs in the financial services sector.

The fund will target banking, insurance, asset management, specialty finance (consumer and commercial), capital markets and financial technology companies. It has closed on over $600 million in commitments and is targeting a final size in excess of $1 billion.

Since mid-2007, financial institutions have written-down asset valuations 20-80% with some sub-sectors trading at a discount to book value, according to the memo. Based on this environment and past cycles, CalPERS believes the industry will remain challenged in the short-term and will need equity capital to reestablish confidence and improve balance sheet ratios.