Insurers are the fundraising foundation stone

Our Global Investor 50 ranking identifies some of the key trends in private debt fundraising, and finds insurers very much to the fore.

There has been much grey matter devoted to the topic of insurance capital, and how to attract more of it into the private debt asset class. For example, we recently published a feature on rated-note feeder funds, one of the relatively new and innovative ways in which fund managers and their advisers have sought to accommodate insurers’ unique requirements, including from a regulatory perspective.

What this year’s Global Investor 50 ranking reminds us of, however, is that insurance money already forms a substantial part of private debt’s capital base. Indeed, the top four allocators to private debt are all insurance companies – MetLife, TIAA, Manulife Financial and Allianz Real Estate. Two other insurers are also to be found in the top 10 in the form of AXA Group and AEGON. Fair to say, from looking at this year’s ranking, insurance is the bedrock of private debt fundraising.

When it comes to geography, one of the most striking aspects is that, although the US accounts for the top two allocators to private debt, the 50 organisations are highly diverse in terms of where they’re based. One country that catches the eye is Canada, accounting for eight of the entries in total and six in the top 20: Manulife Financial, CPP Investments, Public Sector Pension Investment Board, BCI, Ontario Teachers’ Pension Plan and Alberta Investment Management Corporation.

Ottawa-based PSPIB is a particularly notable inclusion, rising from 15th last year to ninth this time, on the back of a hefty private debt allocation of more than 8 percent.

Meanwhile, the relative newcomer to this year’s ranking is Australia. The country’s superannuation funds have long been mainstays in other asset classes such as private equity – now it’s apparent that private debt is on the radar too.

Allocations are not yet substantial enough to see Australian LPs high up the charts but AustralianSuper, Australia Future Fund and Victoria Funds Management Corporation all make it into the top 50 as new entrants.

What we also find is that some organisations are now making big bets. The most obvious examples are the top two, with both MetLife and TIAA boasting private debt allocations in excess of 30 percent. But they are not the only ones to have carved out a significant slice of their portfolios – Allianz Real Estate has an allocation of almost 29 percent and Texas County District and Retirement System nearly 25 percent.

These are eye-catching statements of faith in an asset class that is still relatively immature and where allocations often come from existing buckets such as private equity or fixed income. Many organisations are still only dipping their toes in the water, but it seems there is a growing number prepared to ‘go large’.

Write to the author at andy.t@peimedia.com