Sovereign Wealth Fund Weekly News Roundup: SWFs Get Creative in Fixed Income

May 22, 2015 by Loch Adamson

APFC, CIC and Future Fund Seal Alternative Debt Deals
NZSF and ICD Announce Results
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APFC, CIC and Future Fund Seal Alternative Debt Deals

Australia's Future Fund is no stranger to debt investments, as CIO Raphael Arndt pointed out in an interview with Sovereign Wealth Center earlier this month. For example, in 2009, when debt was attractively priced compared to other assets after the financial crisis, the fund increased its exposure to debt from single digits to fully 20 percent of the portfolio. 

In the same year, the fund teamed up with private equity firm TowerBrook Capital Partners, which has dual headquarters in London and New York, Omers Private Equity, a division of Canadian pension fund manager Ontario Municipal Employees Retirement System, and the Montreal-based Public Sector Pension Investment Board of Canada to form Hayfin Capital Management, a London-based private debt firm, as a joint venture. 

This week, the Future Fund bought a portfolio of assets worth €705 million ($785 million) from Hayfin, which now manages $7.2 billion in a range of lending and collateralized loan obligation (CLO) funds.

 Another state investor willing to invest in private debt: Alaska Permanent Fund Corp. (APFC). We learned this week that APFC, the agency that manages the U.S. state's sovereign wealth fund, will commit $50 million to a fund managed by Audax Mezzanine, a New York-based firm specializing in private debt transactions. APFC’s board decided to allocate the capital to Audax Mezzanine Fund IV, which invests in junior debt issued by private equity-owned middle-market companies. As of March 31, 2015, Alaska's fund allocated 2.5 percent of its portfolio to private debt.

The China Investment Corp. (CIC) also reportedly invested in debt this week. According to reports in the British press, CIC has allocated more than €50 million to the WLR Cardinal Mezzanine Fund, a €350 million ($398.4 million) Irish real estate debt fund, managed by a partnership between billionaire investor Wilbur Ross and Dublin-based asset manager Cardinal Capital Group. The fund will acquire debt from the National Asset Management Agency, which was established by the Irish government in 2009 to purchase property development loans from failing banks. 

NZSF and ICD Announce Results

The New Zealand Superannuation Fund has published its monthly performance figures for April 2015. NZ Super's investments returned 1.2 percent over the period, bringing the fund's overall assets to NZ$29.3 billion ($22.3 billion). The fund's average annual return since inception now stands at an impressive 10.24 percent. 

Meanwhile, Investment Corp. of Dubai (ICD), the emirate's sovereign wealth fund, announced its financial results for the first six months of 2014. In a statement, ICD said its assets under management stood at 643.7 billion U.A.E. dirhams ($175.3 billion) as of June 30, 2014, representing a year-on-year increase of 5.5 percent. The fund also posted a net profit of AED 12.1 billion, an 82.4 percent increase over the same figure for the first-half 2013. 


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