San Joaquin County to interview credit managers

The California pension shortlists Crestline Investors, Silver Creek Capital Management and White Oak Global Advisors for a direct lending mandate.  

The San Joaquin County Employees Retirement Association plans to hear presentations from three credit firms on their new funds on 23 October. 

The $2.5 billion California pension is considering Crestline Investors, Silver Creek Capital Management and White Oak Global Advisors for a direct lending allocation intended to grow its opportunistic credit portfolio.

Following the interviews, consulting firm PCA, which had recommended the three firms, plans to recommend hiring one of the managers.

The pension targets 14 percent to credit strategies and is nearly fully invested. As cash distributions are paid out on funds that have finished their investment periods, additional capital will need to go to new funds to maintain the target allocation, PCA said.

For Crestline, the pension is considering an investment in the Crestline Opportunity Fund III, which is targeting a $1 billion-$1.25 billion fundraise. The firm pursues an absolute return strategy that invests across a range of credit and credit-related opportunities and directly-originated investments.

The geographic focus will be on North America, with a minority exposure to Europe. The investment period will be three years from final close. The Fort Worth, Texas-based manager is charging a 1.5 percent management fee and a 20 percent carry with an 8 percent hurdle. San Joaquin invested $29 million with the previous Crestline Opportunity Fund II.

The Silver Creek credit funds invest in a diversified portfolio of loan and lease origination in mid-market companies in the US and Europe. The Seattle-headquartered firm has $7 billion under management across a variety of credit strategies. It plans to invest for two years from final close. The firm is raising its sixth Silver Creek Credit Opportunities Fund, which is targeting $500 million and plans to allocate the majority of the capital to Europe. The fund is charging a 0.75 percent management fee and a 10 percent carry with a 7.5 percent hurdle rate.

White Oak, meanwhile is raising the White Oak Summit Fund, which is targeting $1 billion-$1.2 billion. The fund offers term loans, asset-based loans and other specialty lending products to companies with enterprise values of $50 million-$1 billion. The Summit fund plans to make 30-40 investments in senior secured loans. San Francisco-based White Oak is charging a 1.25 percent management fee and a 15 percent carry with a 7 percent hurdle.

According to the minutes of a San Joaquin board meeting on 11 September, the pension made new private equity and debt commitments. The board allocated $75 million to the Mesa West Real Estate Income Fund IV, a real estate debt fund, and $50 million to the Ocean Avenue Fund III, a private equity fund of funds.