IPERS outlines 2021 private debt pacing plan

The US public pension approved new private credit managers to manage its increased private credit portfolio.

Institution: Iowa Public Employees’ Retirement System
Headquarters: Des Moines, US
AUM: $42.85 billion
Allocation to alternatives: 23.06%

Iowa Public Employees’ Retirement System set out its remaining 2021 private debt plan in response to the increase of its private credit asset allocation from 3 percent to 8 percent in Q4 2020, according to documents from the pension’s special investment meeting.

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Highlights from IPERS’s August 2021 investment meeting documents:

  • In October 2020, IPERS issued an RFP for private credit managers to manage specific areas including multi-strategy, mezzanine, specialty finance, real assets and special situations to implement the increased private credit allocation.
  • In March 2021, the pension selected Crestline Investors and Marathon Asset Management to each manage $250 million in multi-strategy. The pension also selected Ares Management and Audax Management Company to each manage $100 million in mezzanine lending strategies.
  • In June 2021, the investment board approved two new opportunistic private credit managers, ArrowMark and HPS Investment Partners, to each manage $100 million in specialty finance credit and real assets credit mandates, respectively. In addition, IPERS invested a further $100 million in its existing opportunistic private credit managed by KKR.
  • In August 2021, IPERS held a special meeting to approve hiring Kartesia and ITE Management to manage opportunistic credit mandates totaling around $250 million. The board initially considered these funds at its June meeting but requested staff for a revision of the proposed fee structures.
  • At present, the pension has one outstanding private credit category to fulfill. IPERS has issued another RFP seeking firms to manage real asset credit strategies. The pension anticipates allocating up to $600 million to RAC strategies. This will likely be the final proposal IPERS will issue in response to its growing private credit programme.
  • The $42.85 billion US public pension has also issued an RFP for investment consulting services. After receiving seven proposals, the board members have agreed to retain Wilshire Associates, which has served the pension since 1984. The six-year contract will begin on 1 October 2021.

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Previous private debt commitments by IPERS include $50 million to CapitalSpring Investment Partners VI and $50 million to Principal Real Estate Debt Fund II.

Karl C Koch is the pension’s chief investment officer, who has been in the role since May 2007. He is responsible for asset allocation, investment policies, strategies and selection of investment managers.

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