Connecticut outlines 2022 private credit pacing plan

The US public pension is diversifying its private debt exposure, targeting an expansion into senior debt, mezzanine debt and co-investment strategies.

Institution: Connecticut Retirement Plans and Trust Funds
Headquarters: Hartford, US
AUM: $43.08 billion
Allocation to private debt: 0.7%

Connecticut Retirement Plans and Trust Funds has approved its private credit pacing plan for fiscal year 2022, according to materials from the pension’s June 2021 investment advisory council meeting.

Highlights from Connecticut Retirement Plans and Trust Funds’ June 2021 investment advisory council meeting:

  • CRPTF has outlined its private credit target commitment pacing range for the 2022 fiscal year, with future commitments of between $950 million to $1.05 billion allocated to private credit vehicles. The pension’s current allocation to private debt stands at 0.7 percent of its full investment portfolio, which works out at just over $301 million in value.
  • CRPTF will reduce its regional exposure to North American private debt investments from its former target of 93 percent of total investments to 60-70 percent. This shift in policy will create space for an increase in Western Europe and rest of the world investments from 6 percent to 20-30 percent and 1 percent to 5-10 percent, respectively.
  • CRPTF is intending to diversify its private debt strategy allocations by introducing a 40-50 percent target exposure to senior debt; alongside 10-20 percent to mezzanine debt and 10-20 percent to co-investments.
  • To accommodate these changes, CRPTF will cease investing in specific direct lending vehicles, which currently comprise 51 percent of the pension’s total private debt investment portfolio. The pension’s new senior debt target allocation will comprise the capital formerly allocated specifically to direct lending.
  • The pension has also considered a shift away from its fund-focused investment strategy towards a separately managed accounts-focused structure, which CRPTF believes will aid in enabling higher liquidity and increased transparency over the pension’s private debt capital commitments.

CRPTF’s private debt commitments for fiscal year 2021 focused predominantly on North American investment vehicles, largely comprising special situations and direct lending strategies. Average ticket sizes fluctuated between $50 million and $100million, though there was a peak commitment of $250million to TSSP Adjacent Opportunities Partners in November 2020.

Other recent private debt commitments confirmed by CRPTF include $75 million to Hg Titan and $100 million to Fortress Credit Opportunities Fund V Expansion.

Mark Evans is the principal investment officer for private equity and private credit at CRPTF. Evans maintains primary management and oversight responsibility for the joint portfolios which represent approximately $6 billion-worth of capital exposure across multiple strategies. Evans has more than 25 years of private equity and debt investment experience as both a limited and general partner, including leading fund, direct, and co-investments.

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