US pension earmarks $25m for private debt secondaries

While information about the name of the fund has not emerged, recent documents reveal that the $14.9bn pension fund discussed investing in a direct-lending secondary opportunity in its latest board of trustees meeting in February.

Traditional secondaries transactions tend to account for around two thirds of opportunities in the private debt secondaries market in the US, with ticket sizes ranging between $5m and $100m, according to a recently published report from Unquote sister publications Creditflux and Debtwire. The European Direct Lending Perspectives report found that with an estimated 3-5% of investors looking to sell interests at a given time and investors continuing to bolster private debt allocations in the hunt for yield, these transactions look set to increase.

The report also revealed that general fund underperformance, reducing exposure to a manager or vintage, or a new chief investment officer stepping in and reallocating a portfolio are all reasons why an investor may want to exit their fund commitment.

Direct lending has been on the radar of MainePERS, with the pension fund making $100m commitments each to AG Direct Lending Fund IV, AG Direct Lending Fund III, Ares Capital Europe IV, and TCP Direct Lending Fund VIII. Other recent commitments include $50m to SCP Private Corporate Lending Fund.

The Augusta-based LP has invested 3.5% of its portfolio to alternative credit and 15.6% to private equity, versus a target allocation of 5% and 15% respectively.

Following the departure of the pension scheme's chief investment officer, Andrew Sawyer, in November 2019, James Bennett is currently serving as acting CIO.

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• Topics
• Secondaries
• LPs
• Secondaries
• LP interest secondary
• US