Boston Retirement System is set to commit $15 million to an Alcentra Group distressed debt and special situations fund, Private Debt Investor has learned.
The Massachusetts pension plan board voted to approve the commitment to the Alcentra Clareant Strategic Credit Fund at its Friday meeting, according to a source familiar with the matter. The investment is contingent upon regulatory approval and the contract process.
The board had considered three managers for the private debt allocation: Orchard Global Asset Management, Permira Debt Managers and Alcentra, a meeting agenda shows.
The pension plan declined to comment and Alcentra was not immediately available to comment.
The Clareant Strategic Credit Fund invests in stressed and distressed corporate debt and special situations opportunities mostly in Europe, according to an investor presentation to the San Bernardino County Employees Retirement Association. The fund is targeting €500 million in commitments.
The vehicle’s management fee is 1.5 percent on drawn capital, while it carries a 20 percent incentive fee and 8 percent hurdle rate, the SBCERA document showed. It has a three-year investment period and three-year harvest period, with up to two one-year extensions.
The fund is focused on underperforming companies that are still generating cash and solvent but may be near a covenant breach. The distressed opportunities or special situations the fund targets include rescue financing to overleveraged firms with upcoming maturities or restructuring debt generating equity-like returns. Investments from the fund include performing and non-performing senior secured loans, mezzanine loans, and structured credit instruments.
SBCERA committed $25 million to the fund, while the Korean pension plan Public Officials Benefit Association also allocated $50 million, PDI data shows.
Alcentra Group is a global asset management firm with $31 billion in assets under management as of 31 December, according to its website. The firm is owned by Bank of New York Mellon Corporation.