TDAM moves into private debt

TD Asset Management’s fixed-income group is launching long-term and medium-term private debt funds for Canadian institutional investors.

TD Asset Management (TDAM) is launching two new private debt funds for Canadian institutional investors. 

TD Emerald Private Debt Pooled Fund Trust will have a seven-year duration and the TD Emerald Long Private Debt Pooled Fund Trust is a longer-term 13-year investment vehicle, said Bruce MacKinnon, vice president and director at TDAM. 

The funds are designed to offer investors an enhanced-yield, investment-grade fixed-income alternative in a low interest rate environment, said a statement from TD. 

The bank's asset management business has set specific fundraising targets for the vehicles, but MacKinnon said the opportunity set is large and he expects to continue growing the private debt product suite, with these funds being the first of a series. 

The funds will target returns of 100 to 150 basis points above the S&P/Toronto Stock Exchange (TSX) index, MacKinnon said. They will be invested predominantly in North American companies, with up to 35 percent dedicated outside of the region. The vehicles will take the sponsor-less route. “They are designed to go directly to borrowers and work with dealers as well,” MacKinnon said.

TDAM has also started a new private debt team, with MacKinnon at the helm. His primary focus is on structured and project finance debt transactions in infrastructure, energy and corporate sectors.

The group also includes vice presidents and directors Craig Buckley, Donna Beck and Louis Bélanger. Buckley is responsible for originating and structuring infrastructure debt transactions. Beck will originate and structure corporate and real estate private debt investments, while Bélanger is the lead portfolio manager for the private debt funds.

Speaking about his experience investing in energy, MacKinnon told PDI that there is a lot of headline risk around energy and power investments at the moment. “We may deploy money into other areas first, but [energy is] something we would look at going forward,” he said.

TDAM is part of TD Bank Group. The firm operates across Canada and the US through mutual funds, pooled funds and separately managed accounts. The investment manager had about C$300 billion in assets as of year-end 2015.