CalSTRS and alternative credit firm Kennedy Lewis Investment Management announced a strategic partnership focused on senior corporate lending for nonsponsored borrowers.
The partnership includes investments in Kennedy Lewis’ core lending strategy, which focuses on senior-secured, floating-rate loans to middle- and upper-middle-market nonsponsored companies, according to a July 9 news release. The investment amount was not disclosed.
“There is currently an extremely compelling opportunity set that is complementary to sponsor-backed lending mandates within the nonsponsored direct lending space,” said David K. Chene and Darren L. Richman, co-founders and co-managing partners of Kennedy Lewis, in the news release. “We see the potential for diversification across industries as well as terms and pricing.”
As part of the partnership, the $337.9 billion California State Teachers' Retirement System, West Sacramento, provided seed capital of $200 million to help grow Kennedy Lewis Capital Co., the firm’s perpetual nontraded business development company.
The partnership announcement comes as private credit continues to draw investments and has grown into a more than $1.7 trillion market segment, according to Preqin.
Chene and Richman founded Kennedy Lewis in 2017, and the firm had about $16 billion in assets under management across private funds, a business development company and collateralized loan obligations as of July 1.
CalSTRS had about $7.5 billion in private credit assets at the end of 2023, a spokesperson confirmed. Earlier this year, CalSTRS adopted an updated policy on private credit allocation boosting its fixed-income allocation target to support private credit.
