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Loan Note: AlbaCore identifies new dislocation; Ardian enters real estate debt

Could the dislocation theme be back again? AlbaCore hints at the possibility. Plus: Several important strategic moves by fund managers, including Ardian into real estate debt and MV Credit into the French market. Here's today's brief for our valued subscribers only.

They said it

“There’s going to be a lot of uncertainty about who has exposure to Russia, the indirect exposure. I may know that I’m not exposed, but I’m not really sure who among my clients may be exposed, who has investments that they’re… going to have to write down”

Christopher Smart, former US Treasury and National Security Council special assistant to President Barack Obama, tells The Wall Street Journal the current situation is in some ways akin to the Lehman Brothers collapse in 2008

First Look

AlbaCore identifies a new dislocation
“What most investors knew was coming but were reluctant to accept”. That’s how London-based fund manager AlbaCore Capital Group refers to persistent inflation and resultant higher interest rates in a newly published outlook on the credit markets.

AlbaCore notes that, in recognising the new reality, there has been a shift in exposure away from fixed rate, higher duration assets into floating rate, lower duration or high coupon assets.

Reflecting on the Ukraine crisis, AlbaCore says the most obvious concerns for investors are increased inflationary pressure from higher energy prices and uncertainty around the rate response from central banks. “Government efforts to tame inflation, while limiting risks to growth, is a very tricky balance to strike,” says the firm.

AlbaCore is one of the fund managers that was quick off the mark to raise a dislocation fund in the aftermath of the initial covid outbreak in 2020. “Periods of adjustment in markets broaden opportunities, and the current environment is no different,” the firm says. “We assumed a more attractive entry point would return – dislocations occur more often than one might assume – and here we are.”

Ardian moves into real estate debt 
Paris-based fund manager Ardian has launched a new real estate debt strategy managing funds and mandates related to pan-European real estate projects.

Ardian Real Estate Debt will be managed by Arnaud Chaléac, who becomes head of Ardian real assets debt. Chaléac is a structured financing expert who has been head of group finance at Ardian since 2008. Prior to that, he worked at French groups including industrial gas firm Air Liquide, luxury goods business Kering and banking giant Crédit Agricole.

Sandrine Amsili will work alongside Chaleac as managing director, helping to develop the platform. She joined Ardian last year with 17 years of real estate debt experience at the likes of Europhypo, CBRE Global Investors and SCOR Investment Partners.

The focus of the unit’s activity will be on providing senior debt, alongside banks, in European real estate projects. It said “all investments will have a strong ESG angle… to create spaces and places for more sustainable and decarbonised cities”. Ardian said the strategy would complement its real estate activity headed by Stéphanie Bensimon.

MV Credit launches in France
London-based fund manager MV Credit, an affiliate of Natixis Investment Managers, has launched a new team and office in Paris. The team will be led by Arnaud Heck, who has been appointed head of MV Credit France.

The team of 16 incorporates the former private debt team of Ostrum Asset Management. MV Credit France will take over the management and further development of Ostrum’s collateralised loan obligation and corporate debt products.

The transfer of business activities is expected to be completed by the end of this month and will increase MV Credit’s assets under management to nearly €5 billion.

Essentials

New CLO hire for Signal
London-based fund manager Signal Capital Partners has set up a new collateralised loan obligation platform headed by Rajat Mittal, who has spent the last 15 years at BlueBay Asset Management.

Mittal was responsible for the portfolio management of BlueBay’s first three European CLOs and flagship loan strategies, comprising $1.5 billion in assets under management. He also co-managed more than $6.5 billion in leveraged loan and high yield bond portfolios.

Mittal joins a team of structured credit specialists at Signal, including partner and portfolio manager Nick Waring and portfolio manager Milan Kecman, who are responsible for asset-backed securities investments including from the Signal Beacon ABS fund, a hedge fund focused on securitised products trading.

Director joins Ely Place
London-based placement agent Ely Place Partners has appointed Helene Schutrumpf as a director. She has 15 years of experience in financial markets, including in proprietary trading at Merrill Lynch, and has been fundraising for private equity firms for 10 years on behalf of lower mid-market GPs in Europe, Asia-Pacific and North America.

Ely Place focuses on primary, secondary and co-investment transactions and general partner advisory mandates and operates across private equity, credit, infrastructure and venture capital.

Time to sign up for Germany Forum
Leading speakers from the private debt asset class continue to sign up for our prestigious Germany Forum in Munich on 17-18 May 2022. Among the latest are: Tricia Ward, director and head of private credit at Redington; Priscilla Schnepper, diversified debt funds investment manager at the European Investment Fund; Reji Vettasseri, lead portfolio manager at Decalia; and Benjamin Hemming, portfolio manager at Allianz Global Investors. The early-bird discount expires shortly, so best sign up now!

LP Watch

Institution: Teachers’ Retirement System of Illinois
Headquarters: Springfield, US
AUM: $65.4 billion
Allocation to alternatives: 33.8%

Teachers’ Retirement System of the State of Illinois has confirmed $450 million of private debt commitments.

The commitments were comprised of three funds: $300 million to Garcia Hamilton – Low Duration, $100 million to Locust Point Senior Mortgage Fund and $50 million to Sixth Street Mid-Stage Growth Partners, according to a recent press release.

While TRS has renewed its relationship with Sixth Street, Garcia Hamilton and Locust Point Capital administrate a large proportion of TRS Illinois’s assets. Garcia Hamilton administrates $302.3 million and Locust Point administrates $15.9 million of the assets.

Within the institution’s $65.4 billion portfolio, previous fund commitments have been overwhelmingly focused within the North America region. The commitments made to the funds range from $50 million to $150 million.


Today’s letter was prepared by Andy Thomson with John Bakie and Robin Blumenthal