Loan Note: Credit Suisse and QIA join forces for new platform; mid-market loan performance versus syndication

After Apollo/Mubadala, Credit Suisse and the Qatar Investment Authority become the latest private debt/sovereign wealth fund direct lending tie-up. Plus, how private markets are adapting to a virtual world and the advantages of mid-market loans over broad syndication. Here's today's brief for our valued subscribers only.

They said it

“We believe inflation risk will remain low in the US and Europe in the coming months, but inflation fears could continue to increase gradually.”

Taken from a commentary by Eric Vanraes, fixed income portfolio manager at Eric Sturdza Investments.

First Look

Credit Suisse, QIA in direct lending tie-up

Credit Suisse and Qatar Investment Authority, the sovereign wealth fund which has a stake of more than 5 percent in Credit Suisse, have launched a new direct lending private credit platform (see Credit Suisse’s announcement here) that will provide first- and second-lien loans to upper mid-market and larger companies in the US and Europe.

The platform will be run by Credit Suisse Asset Management’s Credit Investments Group, which is headed by global head and chief investment officer, John Popp. The exact amount of financing available through the platform has not been disclosed but has been described as “multi-billion”.

The CIG team has been operating for more than 20 years in the leveraged finance market and has built up around $60 billion-worth of non-investment grade credit positions.

The partnership has echoes of this one announced by Apollo Global Management and Abu Dhabi SWF Mubadala in early July. The $12 billion platform is also targeting the upper end of the direct lending market.

Still keeping your distance?

The “shift to virtual” may not be absolute. In its latest Private Markets Review, advisory firm Elm Capital said: “While virtual GP-LP communication is now dominant and may stay as permanent practice in investor relations, we remain unconvinced that a full shift to virtual will take place when it comes to fundraising.”

Elm thinks that in the lower mid-market and emerging manager segments of the market in particular, investors will look to continue to spend time with managers before committing.

However, there’s no doubt that alternative assets is no longer (at least for the foreseeable future) quite the “people business” that it used to be, a topic explored in a Friday Letter written by sister title Private Equity International‘s Toby Mitchenall here.

Data snapshot

Mid-market merits. The authors of Opportunities today in middle market lending, a white paper published this month by Nuveen, a US investment management firm, argue that mid-market loans are typically more conservatively structured with lower leverage multiples, higher interest coverage, and tighter covenant packages than broadly syndicated loans.

Essentials

Hiring Freeze at Churchill

Churchill Asset Management has hired former Carlyle Group managing director, Christopher Freeze, as a senior managing director and head of investor relations in New York. Reporting to Churchill’s head of product development and capital raising, David Heilbrunn, Freeze will lead all aspects of the firm’s investor relations effort, including ongoing investor reporting and communication with Churchill’s global institutional investor base.

New private debt head for Sanne

Sanne, a provider of alternative asset and corporate business services, has appointed Keith Miller as global head of private debt. Based in London, he will be responsible for providing guidance and support in building the private debt and loan agency product offering. With more than 20 years’ industry experience, Miller joins Sanne after spells at Global Loan Agency Services Limited and Nomura International.

Roll up for the Forum 
The Private Debt Investor New York Forum Virtual Experience 2020 begins tomorrow with a raft of leading industry speakers covering all of today’s hot topics. If you haven’t already booked your place, take a look here.

LP Watch

Institution: Indiana Public Retirement System
Headquarters: Indianapolis, US
AUM: $38.43 billion
Allocation to alternatives: 18.2%

Indiana Public Retirement System confirmed $275 million-worth of private debt commitments at its September 2020 board meeting, a contact at the pension informed Private Debt Investor.

The commitments comprise $100 million apiece to Kayne Anderson Real Estate Opportunistic Debt II and Oaktree Opportunities Fund XI; alongside $75 million to GSO Capital Opportunities Fund IV.

The $38.43 billion US public pension has a 2 percent target allocation to private debt, which currently sits at 1.5 percent.

INPRS’s private debt commitments tend to target global vehicles pursuing senior or distressed debt strategies.


Institution: Bristol County Retirement System
Headquarters: Taunton, US
AUM: $713 million
Allocation to alternatives: 23%

Bristol County Retirement System has issued a request for proposal for an inaugural private credit manager, according to a release on the pension’s website.

BCRS is intending to commit to a mandate of approximately $25 million, with the investment overseen by the Public Employee Retirement Administration Commission, the organisation which oversees BCRS.

The $713 million US public pension fund is seeking opportunistic debt strategies, per its RFP, with the submission deadline for potential managers set as 14 October 2020.

BCRS currently allocates 23 percent of its investment portfolio to alternative assets.


Today’s letter was prepared by Andy Thomson with John BakieRobin Blumenthal and Adalla Kim.

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