On the go: The Brunel Pension Partnership, composed of 10 Local Government Pension Schemes and with roughly £30bn in assets under management, has launched the second cycle of its private debt portfolio with its private markets manager, Aksia.
The bespoke portfolio will target corporate direct lending strategies in Europe and North America. The pool’s clients have committed £945m to the Brunel Private Debt Portfolio for Cycle 2, which runs from 2020 to 2022.
Brunel’s objective is to build a portfolio of private, corporate loans, diversified by sector and region. Private loans can offer an attractive yield relative to the broadly syndicated market, with greater downside protection and a more hands-on approach from lenders.
The pool will make six to eight primary fund commitments to specialist direct lenders. The Cycle 2 vehicle has already made one primary commitment to a Europe-focused fund, ICG Senior Debt Partners IV, and the second commitment, to a US-focused manager, is expected to follow close on its heels.
Brunel plans to work with managers who share its values as responsible investors. It will allocate to managers with complementary lending strategies such that the overall portfolio of more than 200 loans is diversified by sector, region, and borrower type. Loans are expected to be predominantly senior.
When screening potential partners, the pool will examine how Covid-19 has impacted manager lending practices. By differentiating which managers have let risk creep into their portfolios and which have maintained standards, Brunel will have greater conviction when making commitments.
Aksia has been appointed as Brunel’s private markets manager, and will work together with Brunel to build the portfolio.
Richard Fanshawe, head of private markets at Brunel, said: “The attractions of this asset class for our clients are clear, but the challenges of implementation in this climate are clear, too.”
Fanshawe said that Aksia’s extensive market coverage and industry-leading risk and performance analytics will help Brunel deliver this portfolio.
This article originally appeared on Mandatewire.com
