The Boston Retirement System is looking to commit to two separate credit funds, a private debt vehicle of at least $250 million and a real estate debt fund that will raise at least $200 million, according to consultant NEPC’s website.
The pension fund’s planned private debt commitment is a $60 million allocation to a vehicle focused on European direct lending, niche lending or distressed debt. Managers applying are expected to supply performance data through 30 June for predecessor funds. Proposals are due 29 October at 2pm US Eastern Standard Time.
The real estate debt fund can be either a closed-end or open-end fund with an investment focus on the US. For a closed-end vehicle, BRS, which did not disclose the size of the anticipated commitment, is searching for firms that have raised at least two funds, while open-end funds must have a relevant track record of at least three years. Proposals, which should also contain performance figures through 30 June, are due at 2pm EST on 12 November.
BRS has committed to several distressed debt funds in recent years, including a $25 million commitment to the $900 million GoldenTree Distressed Fund II and $60 million to the firm’s $1.7 billion Fund III, according to PDI data. It has also put money into the €691 million Alcentra Clareant Strategic Credit Fund that targets Europe-focused opportunistic credit investments.
On the performing credit side, BRS has committed $30 million to THL Credit Direct Lending Fund IV, which held a close in September on $461.15 million. That vehicle, which is targeting a 7-9 percent net internal rate of return, lends senior secured and unitranche debt, according to February meeting minutes. The businesses it invests in are generally US private equity sponsor-backed companies with EBITDA of $10 million to $40 million.
BRS has also allocated to HarbourVest Corporate Opportunities Fund II, which is aiming for a 13-16 percent net IRR, according to BRS March meeting minutes. It invests in junior debt and equity securities in companies with less than $100 million of EBITDA.
On the real estate credit front, the Massachusetts pension fund put $15 million into the $2.18 billion Oaktree Real Estate Debt Fund II, which is targeting a 10 percent net IRR and 1.2x multiple on invested capital, according to materials from the State University Retirement Systems of Illinois September 2017 meeting materials.
Founded in 1923, the $5.1 billion Boston Retirement System supports the employees of all City of Boston departments and includes more than 14,000 retired members and 20,000 active members. BRS could not be reached for comment.
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