They said it
“Despite mounting net-zero commitments from the financial sector, and an apparent ESG ‘boom’, the truth is that not even 1 percent of fund assets are currently Paris-aligned.”
Laurent Babikian, joint global director of capital markets at CDP, an environmental disclosure non-profit, commenting on analysis showing the investment industry allegedly doing very little to prevent global warming.
Allocations soar in our Global Investor 30 ranking
Last year may have made life difficult for investors for all sorts of reasons but it’s clear that their appetite for private debt is completely intact. In our Global Investor 30 ranking, published with the November 2021 issue of Private Debt Investor, we discover that the total private debt allocations of the 30 biggest limited partners in private debt increased by no less than 50 percent in the year to December 2020 – from $303.3 billion to $452.6 billion.
In this year’s ranking you’ll find our thoughts on how two organisations have come to dominate the asset class; the continuing dominance of North American allocators; why almost as many LPs want exposure to Europe as they do to North America; and the popularity of subordinated debt.
Ares’ wealth plans
Ares Management is the latest private markets blue-chip manager to prioritise the private wealth market. The firm has unveiled a new 90-strong wealth management solutions unit to develop and distribute its products globally, per a statement. It is led by Raj Dhanda, former chief executive of Black Creek Group, a real estate firm Ares acquired this year. The retail and high-net-worth channels have so far accounted for $45 billion of Ares’ assets under management.
It joins a number of firms hoping to benefit from the growing democratisation of private markets, with its listed peer Apollo Global Management saying that it expects AUM from the private wealth channel to grow from 5 percent today to 30 percent or more.
CLO frenzy ahead of predicted slowdown
“In the current market the big concern is what happens when the switch away from LIBOR happens,” one leading collateralised loan obligation equity investor told PDI at the end of last week. He explained that when the transition occurs, it will take some time for the market to fully absorb the switch – as a result of which, he expects the volume of issuance to go down next year.
The other side of the coin is that there is currently a frenzy of activity in the CLO market as investors rush to deploy capital that may not be able to find a home in a few months’ time. “Everyone is buying everything and there is no sign of investor fatigue,” said our source. He added that he currently favoured opportunities in the new issuance market as most investor focus was on secondaries.
First close for Certior fund
Helsinki-based Certior Capital’s Certior Credit Opportunities Fund III has held a first close at €83 million, backed by a group of Finnish, Benelux and Spanish institutions. The fund aims to achieve a 10 percent-plus net internal rate of return to investors through a diversified pan-European portfolio of 100 or more senior secured loans.
CCOF III will focus predominantly on European SME direct lending, aiming to benefit from special terms through seeding experienced country-specific management teams often in their first or second institutional funds, and through co-investments.
The fund is aiming to raise €300 million in total from international investors. The new vehicle is following the same investment strategy as its two predecessor funds which the firm says are both showing net IRRs in excess of 10 percent with 80 percent of capital invested in senior secured loans.
Additional boost for Brunswick
Brunswick Real Estate Capital, the Nordic fund manager, has added SKr1.1 billion ($130 million, €110 million) to its third senior debt property fund, with one commitment coming from Swedish healthcare group Praktikertjänst’s pension foundation. The fund has now raised SKr13.4 billion in total.
The fund is unleveraged and finances commercial property in growth regions in Sweden with maturities of up to 10 years. Other investors include Swedish insurance company Folksam and Norwegian pension KLP.
Institution: Connecticut Retirement Plans and Trust Funds
Headquarters: Hartford, US
Allocation to alternatives: 10.3%
Connecticut Retirement Plans and Trust Funds confirmed a $450 million commitment to HarbourVest CRPTF Co-Investment Partnership at its October investment advisory council meeting. This co-investment will be managed by HarbourVest Partners, a Boston-based asset manager with $80 billion in assets under management.
At CRPT’s meeting, the pension considered a further commitment to Crescent Capital Group. From recommendation reports created by Hamilton Lane and Meketa, the pension is contemplating an investment of up to $300 million to Crescent CRPTF Private Credit. This vehicle will originate senior loans to North American companies.
A further $300 million of commitments to Crescent CRPTF Multi-Strat LP were also proposed. This fund has a mixed strategy, including senior and junior debt, and high-yield bonds. Some 35 percent of Crescent’s professionals are women and 32 percent are from ethnic minority backgrounds.
Connecticut has a 5 percent target allocation to private credit which stood at 1.1 percent as of August.
The $43.7 billion US pension’s recent real estate commitments have primarily focused on corporate vehicles with senior and subordinated/mezzanine strategies.
Institution: New Mexico State Investment Council
Headquarters: Santa Fe, US
Allocation to alternatives: 18.34%
The fund, managed by Sixth Street, was launched this month and is seeking to raise $3.5 billion.
The sovereign wealth fund’s recent commitments have been made to venture and distressed debt vehicles targeting investments in North America and Europe.
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