The Iowa Public Employees’ Retirement System has collectively garnered over 30 bids after issuing requests for proposals for two separate $250 million managed accounts for private credit, including one focused on real estate debt, PERE sister publication Private Debt Investor has reported.
The $28.27 billion pension fund received 24 submissions for an investment mandate dedicated to private corporate debt and eight applications for another account focused on its private commercial real estate debt, according to a summary of the Des Moines, Iowa-based retirement plan. IPERS issued the RFPs on May 5 and set a June 2 deadline, as PDI previously reported.
Specific manager names were not disclosed and an IPERS representative could not be reached for comment.
The corporate credit vehicle will focus on senior secured credit and not distressed debt or collateralised loan obligations. Second lien secured and unitranche debt also qualifies as “senior secured” alongside first lien debt, according to a question-and-answer document that gave additional information. The document also shows broadly syndicated loans and bank loans are not included in the “private debt” definition for the fund.
Among the requirements are that at least half the investments be in US private credit and no more than one-fifth of the fund be opportunistic investments. Investments in stressed or special situations debt, which would fall under the “opportunistic” category, are allowed so long as the company has not defaulted or entered bankruptcy, the Q&A showed. Distress-for-control strategies are not allowed in the investment vehicle.
IPERS has also put out a request to invest in real estate debt, which would be primarily mezzanine debt, b-notes, first mortgages and construction loans backed by all major asset classes.
The investments, which would be predominantly – though not exclusively – in the US, will target a net return of more than 7 percent. Residential real estate loans cannot be made out of the vehicle, according to a question-and-answer document providing additional information.
IPERS maintains its private credit allocation its private markets portfolio bucket. That category also includes private equity and private real assets. Last May, IPERS selected Monroe Capital and Tennenbaum Capital Partners for its first direct lending mandate, overseeing a total of $400 million, as PDI reported at the time. IPERS also made a $150 million commitment to Blackstone Real Estate Debt Strategies II, a 2013 vintage year fund.
The separate accounts come amidst a robust fundraising atmosphere, with many managers pulling in substantial commitments for debt both strategies.
PDI data show a plurality of capital raised for private credit investments were earmarked for vehicles investing in senior debt, a trend that is likely to continue in the second quarter following large fundraises from Twin Brook Capital Partners, which has raised almost $2.5 billion and Permira Debt Advisors raking in €1.7 billion earlier this month.
PDI data also show that two of the 10 largest funds closed in the first quarter – Cerberus Institutional Real Estate Partners IV’s $1.8 billion fund and TH Real Estate’s KTCU-TH Real Estate $1 billion vehicle – were targeting real estate debt. The trend appears to have continued in the second quarter, at least anecdotally, with Brookfield raising $2.4 billion for its latest vehicle and PIMCO pulling in $2.25 billion for its BRAVO III fund.