More pensions pile into energy funds

 Large US public funds are writing large checks to private debt managers for dedicated energy strategies.

Several large US pension funds have allocated to energy debt funds, and other energy vehicles, to take advantage of the dislocation in energy commodity markets.

The Orange County Employees Retirement System (OCERS) approved an additional $75 million investment with Tennenbaum Capital Partners in a direct lending strategy. “The fund will focus on direct lending to firms operating in the energy and energy-related industries with a strong focus on senior secured loans,” said the $11.9 billion pension fund’s 27 January board meeting materials. OCERS first hired Santa Monica, California-based Tennenbaum to manage a general direct lending strategy last year. 

The pension also tapped Brigade Capital Management for a $100 million investment. “The Brigade Energy Fund will have a broader mandate, and will initially concentrate on energy-industry credits traded in the public markets, but with broader authority to include private credits and long-short strategies in a comprehensive diversified portfolio,” said the meeting documents.  

The $79.7 billion New Jersey Division of Investment also committed $150 million to the GSO Energy Partners fund at its 29 January meeting, while the Teacher Retirement System of Texas invested $250 million in the same fund in December, according to recently released documents from the $129 billion pension fund. GSO is raising a $1 billion fund to lend directly to stressed energy companies. 

The New Jersey pension also invested $150 million in Blackstone Energy Partners II, a private equity fund that is targeting $4.5 billion, according to DealBook

The $53 billion Pennsylvania Public School Employees Retirement System, meanwhile, voted to invest $250 million in the Carlyle Mezzanine Energy Opportunities Fund II and $200 million in the Avenue Energy Opportunities Fund at its December meeting, as PDI previously reported

Many of these managers are raising large funds for the energy play and further pension fund commitments are anticipated across the sector.