Oklahoma Tobacco fund preps direct lending, custodian searches

Oklahoma Tobacco Settlement Endowment Trust, Oklahoma City, plans to issue an RFP in the next couple of weeks for one or two U.S. direct lending managers, said Lisa Murray, chief investment officer at the Oklahoma state treasurer's office, which oversees the roughly $1 billion trust.

The endowment trust had selected Alcentra in summer for a $25 million commitment to its Clareant European Direct Lending Fund II, but “contract issues and the quick hard closing date,” meant the firm was not hired, Ms. Murray wrote in an email. Alcentra would have been the trust's first European direct lending manager. Alcentra officials could not immediately be reached for comment.

Instead, investment consultant NEPC has recommended that the trust search for U.S. direct lending managers, Ms. Murray wrote.

The total targeted commitment size is $30 million. Funding will come from rebalancing in the dynamic fixed-income allocation with no terminations, Ms. Murray wrote.

Existing U.S. direct lending manager, Medley Capital, which manages $32 million for the trust, will be invited to bid.

The RFP will be posted on NEPC's website.

Finalist interviews are anticipated for the June 21 meeting with a hiring decision sometime after.

Last year, the board raised its private debt target 2 percentage points to 10% of the overall portfolio.

Additionally, the trust plans on issuing an RFP in the next couple of months for a custodian/securities lending provider. It has been six years since these services have gone out to bid, Ms. Murray wrote.

Incumbent custodian Bank of Oklahoma and securities lending provider BNY Mellon will be invited to rebid.

The RFP will also be posted on NEPC's website.