Loan Note: ESG takes root in investment processes; Allspring arises from acquisition

Evidence that ESG adoption in investment processes is growing. Plus, the birth of Allspring and the latest from the hiring front. Here's today's brief for our valued subscribers only.

They said it

“Across the entire market, there are fraudsters putting themselves forward as private debt lenders, often cloning real funds, and taking project teams to the cleaners.”

In a guest article for Private Debt Investor, David Rose, chairman of the Project Finance Exchange, argues that the industry must self-regulate (Read more here).

First look

Proof that ESG is catching on
New research from trade body the Alternative Credit Council in partnership with law firm Allen & Overy reveals that private credit managers are accelerating the integration of environmental, social and governance issues into their investment strategies and engagement with businesses on sustainability.

Research from 57 private credit managers and investors based in the US, Europe and Asia-Pacific, collectively managing more than $600 billion, finds that 74 percent already integrate ESG into their investment strategies and consider it to be a core part of their approach to due diligence, borrower engagement and investor reporting.

The survey also found that managers are a growing source of guidance on sustainability issues for many small to medium-sized enterprises and mid-market businesses. Almost half of private credit managers see this service as their biggest value-add on ESG issues.

Jiří Krόl, global head of the ACC, said: “It is encouraging to see how quickly the industry adapted and deepened its approach to ESG integration. There is broad agreement that we are still in the early stages of development when it comes to methodologies, loan documentation and engagement practices. It is also clear that while regulation can be helpful in some ways, the real driver of change is the industry’s desire to innovate and deliver for its borrowers, investors and society at large.”

Allspring is born from PE acquisition 
Asset manager Allspring Global Investments has announced the commencement of operations as an independent firm, according to a news release.

The announcement coincides with the closing of the acquisition of Wells Fargo Asset Management, Allspring’s previous name, by private equity firms GTCR and Reverence Capital Partners from Wells Fargo & Co.

GTCR and Reverence Capital will take majority ownership of Allspring while its management, portfolio managers and employees will hold a significant share of the company’s equity. In addition, Wells Fargo will own a 9.9 percent equity interest and serve as a client and distribution partner to Allspring.


Hawes leads UK asset-based lending push at PwC
Professional services firm PwC has appointed Chris Hawes to lead its UK asset-based lending offering within its debt and capital advisory team.

Hawes brings 23 years of ABL experience from building and leading teams at ABN AMRO, NatWest, HSBC and, most recently, M&G. He has experience in structuring and providing asset-based facilities to corporates across multiple sectors in the UK, the US, Europe and Asia.

The debt and capital advisory team comprises 30 people across the UK. It helps private, listed and private equity-backed companies requiring working capital and asset-based facilities.

Responsible investment hires for Alcentra
Alcentra, the alternative credit specialist which is part of BNY Mellon Investment Management, has appointed three people to its dedicated responsible investing team.

Ross Curran becomes head of responsible investing. With over 15 years at Alcentra as a liquid credit portfolio manager, he has helped develop and integrate Alcentra’s RI policy into the broader investment process.

Curran will be supported by new hires Adriana Carvallo from Norges Bank Investment Management as head of ESG integration and Amanda Provencal, who has worked in multiple industries, as ESG analyst. Both will report to Curran and be based in London.

Quilam gets further backing from Wafra
London-based specialist investment firm Quilam Capital has received an additional £300 million ($403 million; €352 million) of investment capital from US investment house Wafra Capital Partners.

The joint venture between the firms was formed in 2019. Following the latest investment, Quilam now has around £600 million available to invest.

Founded in 2017 by Kieran McSweeney and Marc Sefton, Quilam focuses on the speciality finance sector including platforms in the consumer and SME finance, leasing and mortgage markets. The firm offers finance and hybrid capital solutions.

LP watch

Institution: Korea Post
Headquarters: Sejong-si, South Korea
AUM: 141.95 trillion won
Allocation to alternatives: 8.45%

Korea Post has issued a request for proposal for a US real estate debt fund.

The firm aims to commit 200 billion Korean won to the fund, which invests in commercial properties in the US with a senior/mezzanine debt strategy. The eligible manager should manage a commingled fund of at least 1 trillion won ($845 million; €737 million) in size, with at least two years’ management experience in US real estate debt funds. Overseas managers with a corporate in South Korea can also apply.

The submission deadline is 24 November, with a decision to be made by the investment committee in December.

The 141.95 trillion won South Korean government agency has an 8.45 percent allocation to alternative investments.

Today’s letter was prepared by Andy Thomson with John BakieRobin Blumenthal and Michael Haley.

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