Loan Note: Kennedy Lewis strikes permanent capital deal, PennantPark/Pantheon tie-up, Mercer’s new head of debt

Why Kennedy Lewis is looking to the future with confidence after striking a deal with an Italian asset manager. Plus, Pantheon backs PennantPark and Mercer has a new head of private debt.

They said it

“One third of investors have already invested in distressed or opportunistic strategies that explicitly seek to benefit from the covid-19 fallout”

Taken from the asset owner survey Managing through Uncertainty by consultancy bfinance

First look

A stake in the future

Timeless appeal: Kennedy/Azimut deal shows attractions of permanent capital

It only closed its first fund in 2018, but Kennedy Lewis Investment Management is already able to boast about permanent capital thanks to this deal struck with Azimut Alternative Capital Partners, an acquirer of stakes in alternative asset firms that was set up even more recently than Kennedy Lewis – in November of last year. The deal is the first AACP has completed.

Kennedy Lewis says the deal will allow it to increase its commitments to its own funds, thereby deepening relationships with LPs, while providing a new sourcing channel for investment opportunities. AACP is owned by Italy-based asset manager Azimut Group, which has 17 offices around the world.

See our September 2019 cover story here, where we took a Deep Dive into the attractiveness of permanent capital for private debt firms.

Pennant/Pantheon join forces
A second strategic tie-up this week sees New York-based fund manager PennantPark announce a joint venture with Pantheon, the London-based alternative assets investor.

Pantheon has invested $35 million in capital for a 28 percent stake in a special-purpose vehicle holding $356 million of senior loans at fair value. The arrangement also allows for the possibility of Pantheon investing an additional $30 million over time.

PennantPark said combining with Pantheon would give it “buying power to drive new loan originations and increase the scale of its middle market financing platform”.

London calling (successfully)
Having been severely affected by the covid-19 outbreak, businesses in London may be pleased to know that investors have not lost faith in the UK capital, with 99 percent of investors worth a combined $1 trillion saying they are still keen to invest there.

A survey from the City of London Corporation found that 79 percent of these investors are still actively investing.

This vote of confidence does not mean the pandemic is being taken any less seriously, however. Well over two thirds said they wanted to see the development of a pandemic recurrence prevention plan, which would make them more favourably disposed to invest in future.

Essentials

Scopelliti lands at Mercer
Mercer has become a major player in private debt consultancy, with around $4 billion in assets under management in multi-manager strategies. Now it has a new global head of private debt in the form of David Scopelliti, former chief executive of Alcentra Capital Corporation. Read more here.

Green steps up at AnaCap
European private equity firm AnaCap Financial Partners has promoted credit specialist Edward Green to partner. Green, who has been at the firm since 2007, joined the credit team in 2018, leading a portfolio asset management platform including debt servicing and real estate management for the firm’s credit investments.

Investcorp does the double
Collateralised loan obligations may be under close scrutiny, but capital is still flowing to established players. Investcorp has wrapped up its second such vehicle in 2020, closing Harvest CLO XXIV on around €250 million. Earlier in the year, the firm closed Harvest XXIII on €489 million – the largest European CLO this year to date.

LP watch

Institution: Cincinnati Retirement System
Headquarters: Cincinnati, US
AUM: $2.04bn
Allocation to alternatives: 28.07%

Cincinnati Retirement System has committed $40 million to HIG Bayside Loan Opportunity Fund VI, according to minutes from the pension’s June investment subcommittee meeting.

HIG Capital’s credit vehicle is in market targeting $1.25 billion in capital commitments. The fund’s immediate predecessor held a final close on $1.1 billion in June 2019.

This commitment marks CRS’s first known foray into private debt.


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

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