London Pensions Fund Authority hired Apollo Global Management to run a £150 million ($235.1 million) alternative credit allocation, a spokesman said.
The allocation includes distressed debt, real estate debt, leveraged senior loans and private lending. It is an unconstrained allocation and targets absolute returns by investment across a number of higher-yielding debt markets. The majority of investments are expected to be made within developed markets, although LPFA said in a news release Tuesday there is also a scope for an allocation to emerging markets.
The £4.8 billion pension fund chose Apollo following a two-part procurement process. LPFA shortlisted about 35 applications to four in March — Apollo, Babson Capital Europe, Ares Management and GSO Capital Partners.
The procurement process has also created a national framework that allows other local government pension funds in the U.K. to select any one of the four managers for similar allocations.
“The framework is for the benefit of other (local government pension scheme) funds,” the spokesman said in an e-mail. “If they want to (make the same allocation), they don’t need to run a costly/lengthy full tender process — they can go straight to the short-listed parties.”
The new framework will remain operational until February 2019.