Lindsey McMurray, managing partner of Pollen Street Capital, following the announcement of the firm’s merger with listed investment trust Honeycomb

First look

HPS becomes latest to strike insurance deal
HPS Investment Partners has reached out to that revered source of permanent capital, the insurance company. The firm has agreed to sell a minority stake to Guardian Life, one of the largest life insurers in the US.

Guardian has its own in-house investment platform and claimed that the deal would expand its investment capabilities. The two firms said they would be co-developing “bespoke investment strategies suitable for the insurance market”.

The deal also involves Guardian investing a “strategically important” amount of capital in HPS to invest and manage across a range of private credit strategies.

Last year saw a spate of fund manager/insurance deals including Apollo Global Management/Athene, Adams Street Partners/American Equity Investment Life Insurance, Blackstone/Allstate, Aflac/Sound Point Capital Management and Sun Life Financial/Crescent Capital.

It would be no surprise if more tie-ups were to follow. “There’s a natural marriage between asset managers who can generate a higher yield or provide more attractive forms of credit with insurance companies that have a need to put a lot of capital to work,” Luke Schlafly, head of insurance investment solutions at PineBridge Investments, told us in an article last year.

Ares in major net lease transaction 
Seen as a good way to achieve low risk, steady income while protecting against inflation, the triple net lease strategy – which involves a corporate tenant paying all the expenses of a property – has been gaining in popularity. Perhaps the most eye-catching recent move into the space was by Carlyle Group, when it agreed to buy a net lease business from iStar for $3 billion earlier this month.

Towards the end of last week, Ares Management – the leading firm in the PDI 100 – made a striking statement of its own with the $3.8 billion acquisition of Capital Automotive from Brookfield. Based in Virginia and described as a “self-managed real estate company”, the firm provides sale-leaseback capital to automotive dealers in the US and Canada and has a portfolio of more than 250 real estate assets structured as long-term triple net leases.

“This is an area of the market that plays to Ares’ strengths,” said David Roth, the firm’s partner and co-head of US real estate. “We believe that our ability to apply a hybrid real estate and credit lens to assess opportunities is a key differentiator.”

Essentials

Duo step up at Harbert
Nashville, Tennessee-based Harbert Credit Solutions, part of Harbert Management Corporation, has promoted Tim Henry to director and Tyler Crace to senior associate.

Henry joined Credit Solutions as an associate in January 2016, having previously been at Harris Williams & Associates in its healthcare M&A group. His role will include sourcing and underwriting for new transactions and will evolve into one of portfolio management.

Crace joined Credit Solutions as an associate in 2017, having worked as an intern in the Atlanta office of Harbert Management Corporation’s private equity team. He supports investment activities with models, confirmatory due diligence, quarterly valuations and portfolio monitoring.

Harbert Credit Solutions is investing its $300 million Fund IV, investing $5 million to $15 million in companies with EBITDA between $2 million and $10 million in the lower mid-market.

Tikehau reports strong year in deployment, fundraising
Paris-based fund manager Tikehau Capital reports that its assets under management increased 20 percent last year to end up at €34.3 billion.

The firm deployed €5.5 billion of capital during the year, with €3.7 billion deployed in the second half. The net new fundraising total for the year was €6.4 billion, with half of this raised for the firm’s private debt strategies, covering areas such as direct lending, impact lending and secondary private debt.

Glennmont backs Italian resi bonds 
London-based fund manager Glennmont Partners has invested in a €100 million bonds programme dedicated to financing energy efficiency improvements in residential buildings in Italy.

The transaction consists of a portfolio of bonds issued to finance energy efficiency works on residential buildings in Italy, including self-consumption solar rooftop systems, new heating systems and other structural energy efficiency projects. The investment involves several European investors and banks, including Glennmont through its Green Credit Strategy REBS1 (Renewable Energy Backed Securities).

The energy efficiency works will benefit from the so-called “superbonus” tax credit programme implemented by the Italian government in 2020 to support the energy efficiency improvements of Italian homes.

Hercules Capital makes management changes
Hercules Capital has named Christian Follmann as chief operating officer, a new position at the venture debt specialty finance company. Follmann has worked at the firm for 15 years, most recently as senior director of operations and strategic projects.

Hercules has also appointed Charlie Vandis, currently senior managing director of credit, to the post of chief credit officer, and hired Kiersten Zaza Botelho as general counsel and chief compliance officer, from her position as vice president and associate general counsel in the Boston office of Bain Capital Credit.

Last year, Hercules added strategic capabilities, expanded its investment platform by forming a registered investment adviser, and made “significant investments” in its team, infrastructure and platform “that led to historical record performance in multiple categories”, said Scott Bluestein, chief executive officer and chief investment officer of the publicly traded company, in a news release.

As such, Hercules plans to take its business to “the next level” by investing in the executive management team, which Bluestein said is vital to the expansion and success of the company.

LP Watch

Institution: Illinois Municipal Retirement Fund
Headquarters: Oak Brook, US
AUM: $56.8 billion
Allocation to alternatives: 12.8%

Illinois Municipal Retirement Fund has approved a $50 million commitment to Clearlake Capital Group‘s third opportunities fund, according to a press release from the pension.

The pension committed $50 million to Clearlake Opportunities Partners III. This follows prior investment into the predecessor funds, with the pension committing $75 million to Fund II.

In a press release following the pension’s February investment committee meeting, it announced it will up its target for investing into minority investment managers in the private equity market. This will increase to 25 percent by 1 March 2022 from a previous target of 22 percent.

The $56.8 billion US public pension’s recent private equity commitments have tended to target North American venture/growth equity vehicles.

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