Nordic quintet backs $1bn investment in US mid-market loans [updated]
Five Nordic pensions institutions have allocated $550m (€475m) to a fund investing in senior secured loans to middle-market US companies.
The providers include Denmark’s PFA Pension, PenSam and Velliv (formerly Nordea Liv & Pension Denmark), and the fund aims to raise $1bn in total.
The fund has been created and is managed by Churchill Asset Management, a subsidiary of Nuveen, the asset management arm of US pension fund TIAA.
The five pension funds acted as seed investors in the fund, which cannot be named due to US marketing restrictions. Nuveen said it was talking to other institutions about investing in the fund.
Anders Stensbøl Christiansen, CIO at Velliv, told IPE: “We are investing in private market loans to these smaller US companies because they provide higher yields than broadly syndicated loans to larger companies, and because they typically carry lower default risk due to more conservative underwriting practices.”
He said the partnership with Nuveen should deliver attractive risk-adjusted returns for its customers.
“Private credit is an attractive alternative to the more liquid, traditional fixed income market for our portfolio,” he added.
Per Frederiksen, head of Nuveen’s Nordics advisory business, said: “One thing we are focused on is that we don’t want to overburden Churchill – we want them to stay in the sweet spot they are in now.”
Of the two unnamed Nordic institutions in the investor group, one is Danish and the other is a large Finnish pension insurer, he said.
“TIAA knows what it means to be a long-term investor and has the same needs as these pension funds, including a balance sheet that is aligned with theirs,” Frederiksen said. “This opened a lot of doors – they need strong partners and not only do we have the management capabilities but we also provide our own capital.”
The US middle market company sector was so large it equated to the third largest economy in the world when seen in isolation, according to Nuveen.
Churchill Asset Management is a specialist middle-market US loans manager that was established in 2015.
In December last year, PenSam struck a deal with TIAA and Nuveen to invest DKK1.2bn (€161m) in US private equity.
This article was updated on 3 October to amend the fundraising target. It was amended again on 9 October to correct details about Churchill Asset Management.