They said it

“With inflation remaining around a 40-year high, investors and financial advisers will be scratching their heads regarding where there might be inflation-busting investment opportunities”

Andrew Aldridge, a partner at growth capital-focused fund manager Deepbridge Capital

First look

AlbaCore reflects on summer rally
London-based fund manager AlbaCore Capital Group says in its latest Credit Market Update it has been “pleasantly surprised” by many of its portfolio companies’ second-quarter results, due to their apparent ability to pass through price increases.

The firm is also seeing some signs of optimism in the US, where inflation has relented slightly due to falling petrol prices, and which is perceived to have a more diverse economy and more resilient energy sector than the UK and Europe.

AlbaCore also reflects on a summer rally in the equities, high yield and loan markets that helped to win back some of the losses from these markets’ wipe-out in the first half of the year. Nonetheless, the rally “has not diminished our appetite for secondary, senior secured risk trading at attractive discounts to par”, the firm says. It has however “somewhat narrowed” the volume of credits that might make a 15 percent to 20 percent return.

The firm says it is “wishful thinking” to plan for rates to come back down in 2023 – it is factoring this view into its models and underwriting.

Tikehau seeks wealth capital through iCapital tie-up
As part of the burgeoning trend to attract retail funds, Tikehau Capital, the Paris-based alternative asset manager, and iCapital, the global fintech platform, have announced a partnership that aims to increase wealth managers’ access to Tikehau’s private market investments.

Tikehau will launch a customised marketplace powered by iCapital’s technology to deliver its alternative offerings to wealth managers and their high-net-worth clients in the EMEA region.

The digital solution will provide wealth managers with access to alternative investments, which are generally accessible to institutional investors only. It includes the second vintage of Tikehau’s impact-driven real estate value-add strategy, and the third vintage of the firm’s special opportunities strategy, which allows investors to invest in credit opportunities across market cycles and credit dislocation.

Tikehau’s offerings will be made available via Allfunds, the fund distribution network. iCapital and Allfunds announced a strategic partnership in June 2021 through which iCapital makes private market investment opportunities available for Allfunds’ clients.

While institutional investors have long had access to alternative investing opportunities, high-net-worth investors and their advisers have historically faced significant barriers such as high investment minimum levels and difficulties in accessing top-tier asset managers.

We return next Thursday 
A quick note to our readers that there will be no Loan Note next Monday 19 September as the UK pays its respects to Her Majesty the Queen on the day of her funeral. Our service will resume as normal on Thursday 22 September.

Essentials

Dear LP: What’s on your mind?
Private Debt Investor’s research colleagues want to hear from all investors globally – on an anonymous basis – about their investment plans for our LP Perspectives Survey 2023. Now in its 11th year, the survey results will be published in a special report in December. Click here to take part. The deadline for submissions is 7 October.

Markets face up to reality
S&P Global Ratings, in its weekly newsletter This Week in Credit (login required), says a “realistic tone” is pervading markets as they resign themselves to central bank rate hiking cycles being far from over.

Although the rating agency recorded no defaults in the last week, it said there had been several recent downgrades to the ‘CCC/C’ rating category, increasing the possibility of restructurings in the near term.

The leveraged loan markets, meanwhile, were showing renewed signs of life. In the US, strong leveraged loan issuance was joined by a “surge” of investment-grade bond issuance. In Europe, leveraged loans were being issued again after a four-week lull.

McClurg leads private credit push at HSBC Alternatives
HSBC Asset Management has appointed Scott McClurg as head of private credit for its alternatives division, HSBC Alternatives.

McClurg will join HSBC AM on 1 October. In the newly created position, he will be based in London and responsible for the strategic development and management of the private credit business, which encompasses direct lending and infrastructure debt.

He joined HSBC in 2010 and has held various senior positions across commercial banking. He is currently head of leverage finance UK, middle market financial sponsors, and was instrumental in the creation of the HSBC Senior UK Direct Lending strategy. Prior to this, he was head of energy and sustainability, where he led the sustainable finance strategy across the UK and internationally, and drove sustainable infrastructure investment across diverse sectors.

LP watch

Institution: Teachers’ Retirement System of Louisiana
Headquarters: Baton Rouge, US
AUM: $25.4 billion

Teachers’ Retirement System of Louisiana has committed $150 million across two private debt funds, a contact at the pension confirmed.

At the pension’s September board meeting, it announced it will invest $125 million into HPS Investment Partners’ second special opportunities debt fund, HPS Special Situations Opportunity Fund II. The firm also committed $25 million to Ares Special Opportunities Fund II. This represents a top-up commitment, as the pension previously committed $100 million to the fund in September 2021.

At the pension’s meeting, it also outlined its target commitment pacing plan for 2023. Over the course of the year, TRSL will commit between $2.9 billion and $3.9 billion to private markets. TRSL will aim to invest: $700 million to $900 million across four to six distressed/mezzanine debt funds; and $400 million to $500 million across two to four direct lending funds.

The Baton Rouge-based pension’s recent private debt commitments have tended to focus on North America-based vehicles targeting distressed or subordinated/mezzanine debt returns.

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