Barings and Oak Hill Advisors have won mandates from the Strathclyde Pension Fund, with the Scottish local authority pension fund contracting the two asset management firms to manage multi-asset credit investments.
The two have been awarded contracts of £300m (€346m) and £150m, respectively, according to Jacqueline Gillies, chief pensions officer for investment at Strathclyde.
In all, the pension fund received seven offers in the tender, according to the award notice on the EU’s TED electronic tenders service
In the original tender notice put out by Glasgow City Council on behalf of the pension fund, the council had called for managers to run a multi-asset credit mandate, with the aim of achieving a return of LIBOR plus 4% a year net of fees.
It was to be focused mainly on the high-yield debt and syndicated loans markets, but managers would be free to invest in a range of other predominantly liquid debt assets, with the main purpose of the mandate being to provide exposure to higher-yielding credit market beta.
The mandate size was provisionally set at £300m, but, in the end, the pension fund decided to appoint two managers and increase the overall size of the investment management sought – as it had reserved the right to do in the wording of the tender notice.
While Glasgow City Council said in the original notice that the preferred approach would be to invest through a segregated mandate, it also said a pooled fund or bespoke mandate within a pooled wrapper would be considered as long as the approach still complied with the requirements of the LGPS regulations.
As part of a revised investment strategy set in 2015, Strathclyde Pension Fund is now considering its new credit allocations in terms of, among other things, short-term enhanced yield and credit rather than more traditional fixed income investments.
In March, the pension fund awarded £750m of multi-asset credit mandates to Babson Capital, Oak Hill Capital, the Alcentra Clareant European Direct Lending Fund II and the Babson Global Private Loan Fund, as part of the strategic asset allocation revamp.
Babson Capital Management announced in March plans to combine its business with that of its subsidiaries Cornerstone Real Estate Advisers, Wood Creek Capital Management and Baring Asset Management into one firm under the Barings brand.
For more on the Barings rebrand, see Strategically Speaking in the December issue of IPE magazine