London Borough of Newham Pension Fund appoints private debt managers

28 April 2017 in Council and democracy and Finance
The London Borough of Newham Pension Fund (“Newham”) has selected three managers to operate their allocation to private debt. Newham, advised by consultant bfinance, have appointed Permira and  BlueBay Asset Management to run the European section of the Private Debt mandate, with Brightwood Capital managing the US component that is focused on the non-sponsored market.
Newham believe private debt offers investors appealing long term diversification from other asset classes and attractive risk adjusted returns. This new asset class in Newham’s portfolio will provide additional income streams to manage its liabilities and provide continued positive cash flows.

Speaking about the manager appointments, Councillor Forhad Hussain, Chair of Newham’s Investment and Accounts Committee, said, “The addition of this new asset class has been possible due to nimble governance and transparency that the Committee has developed through trustee training and member engagement. Newham has again shown the importance of being ahead of the curve by building a robust strategic asset allocation in response to economic uncertainty.”

Councillor Forhad Hussain continued: “Private debt has grown into an established asset class that we believe will complement our existing portfolio of investments and help manage volatility. This is our first allocation to the asset class and we have identified three managers that we believe can provide our portfolio with investments that complement each other and Newham Pension Fund’s portfolio as a whole.”

Niels Bodenheim, Director Private Markets, said, “The managers met all the objectives of the tender and collectively provide a good blend of both European and US diversification as well as exposure to the sponsor and sponsor-less deal activity. As these strategies are buy-and-hold in nature the aim of the tender was also to find managers with previous fund success given the lack of product liquidity in the market.”

Anthony Fobel, Head of Private Debt at BlueBay Asset Management, said, “The continued structural shift in the financing markets in Europe away from traditional bank sources creates opportunities for alternative financing options for small and medium sized businesses in the form of private debt. For those investing in private debt, the improving economic environment and benign credit conditions with low default rates provide an opportunity to generate attractive returns. As Newham has demonstrated, we have seen increased appetite from Local Government Pension Scheme investors to take advantage of this opportunity."

James Greenwood, Partner and CEO of Permira Debt Managers, said, “Permira Credit Solutions III (“PCS3”) will continue the successful strategy of predecessor funds, Permira Credit Solutions I and Permira Credit Solutions II; a highly selective strategy focused predominantly on primary, senior secured investments in mid-market companies in Europe. Typically, the PDM funds act as sole or lead lender, and invest in both sponsor-owned and non-sponsored businesses. PCS3 has generated significant interest from UK Local Authorities, and we are delighted that Newham have decided to select PDM as one of their preferred managers to invest in the asset class.”

About Brightwood Capital Advisors
Brightwood is an independent credit manager that invests capital across a range of products including first and second lien term loans as well as Unitranche facilities. The group has regional offices across the US including New York, Chicago, Atlanta and Los Angeles to provide capital too small to medium sized enterprises locally. The focus is on growing enterprises in key industries like healthcare, business services, franchising, transport & logistics as well as technology & telecommunications.