Chicago Police kicks off credit searches

The $2.9 billion pension plan plans to place $40 million with an opportunistic credit manager and allocate $20 million to a direct lending mandate.

The Policemen’s Annuity & Benefit Fund of Chicago has issued requests for proposals (RFPs) for managers to handle a $40 million opportunistic credit mandate and a $20 million direct lending mandate. Proposals for the opportunistic credit allocation are due 4 November, while the deadline for direct lending applications is 5 December.

Applying managers are asked to submit electronic applications to the pension fund’s consultant NEPC, and send hard copies to the pension’s executive director Regina Tuczak.

The pension is seeking an open-end hedge fund vehicle or a short-dated private fund to manage its opportunistic credit allocation. It is seeking a manager that invests into a broad array of global credit assets such as structured or corporate credit, distressed investments, non-performing loans (NPLs) and hard assets. The RFP outlines that the mandate is not intended to be solely an origination vehicle, as the pension is conducting a separate search for direct lending origination vehicles.

For closed-end funds, applicants must have been in operation for at least five years prior to 30 June and have a track record including a minimum of two opportunistic credit funds. The proposed fund should have a fundraising target of at least $750 million. If the firm is proposing an open-end vehicle, the strategy should have an audited track record of at least five years as of 30 June. Fund assets under management should be over $500 million. The opportunistic credit management team must have at least six dedicated investment professionals assigned to the fund.

The direct lending search calls for firms raising a private direct lending fund that originates or participates in senior, first lien, second lien and/or unitranche loans made to sponsored or unsponsored borrowers. The search will target US and European strategies, or a blend of the two. Asian, mezzanine and funds-of-funds strategies will not be considered.

The direct lending RFP specifies that the applying firm should have at least $1 billion in institutional assets under management. The firm should also have a track record of at least one prior direct lending fund. The proposing firm must have been in operation as an investment management organization for at least four years as of 30 June. The direct lending RFP also requires that the manager have at least six investment professionals dedicated to the fund.