Montana Board of Investment looks to enter the energy debt space

The Helena-based limited partner currently has $268 million invested in energy-focused funds, but none are debt-focused.

The Montana Board of Investments is looking to add energy debt investments to its portfolio, according to minutes from an 22-23 August board meeting.

The Helena-based limited partner currently has $268 million invested in energy-focused funds. None of these investments are in debt-focused energy funds yet, but the August meeting minutes expressed that staff members were “looking to add debt strategies for mining companies or energy”.

The BOI has made five investments in energy so far in 2018, and the majority of its other energy investments were relatively recent, according to meeting minutes.

Energy is the focus of many funds that were launched this year. Blackstone GSO launched its GSO Energy Select Opportunities Fund II in January of this year, which has a target size of $5 billion. IFM Investors is reportedly seeking $500 million for its initial US infrastructure debt fund, and the firm fully deployed its initial $140 million global infrastructure debt fund earlier this year.

Montana BOI is also looking to increase its direct lending investments, especially in Asia, according to an investment report from the end of 2017.

Private Debt Investor previously reported that the BOI made two investments this year into Deerfield’s latest direct lending fund, Deerpath Capital Advantage IV. The board originally invested $30 million in the first quarter of 2018, and then doubled it during the second quarter, according to August meeting minutes.

Montana BOI also invested $75 million into OCP Asia III in the first quarter, which is a direct lending fund focused on the Asia-Pacific region. The investment was a re-up from the board’s investment of $30 million in OCP Asia Fund II.

The board’s debt investment allocation falls in its private equity bucket, which makes up 10 percent of its overall asset allocation. Debt investments can occupy up to a quarter of that bucket.

Montana BOI oversees all of Montana’s investments across its various pension funds, hedge funds and other pools of capital. It was created in 1972 and managed over $17 billion in assets as of the end of 2017.