The investment committee of the Strathclyde Pension Fund, Glasgow, Scotland, approved four new allocations totaling £90 million ($110.6 million) for its direct investment portfolio.
The £19 billion fund committed £40 million to the Pemberton U.K. Mid-Market Lending Fund, managed by Pemberton Capital Advisors. The fund aims to capitalize on the “strong demand for non-bank corporate financing to small and medium-size enterprises in the U.K.,” said investment committee documents.
The committee also approved a £20 million commitment to Maven Capital Partners' Maven U.K. Regional Buyout Fund. The fund focuses on small and emerging companies in six economic regions in the U.K., including Glasgow.
Iona Environmental Infrastructure IV, which focuses on bioenergy and resource efficiency sectors and is managed by Iona Capital, received a £20 million commitment.
The last commitment was £10 million to Pentech Fund III, which invests in early stage software and technology firms and is managed by Pentech Ventures.
A spokesman for Glasgow City Council, which administers the fund, said at the end of 2016, direct investment portfolio commitments were £627 million against a total capacity of £940 million.
The investment committee also approved a rebalancing strategy. Its exposure to equities has climbed to 69%, “significant(ly) above” a 62.5% target but within its target range, said the investment committee documents. “The panel acknowledged that some of the underweight to (its short-term enhanced yield portfolio of investments) would be self-correcting as funds were drawn down over time by managers. However, it would be appropriate to allocate additional funds to multiasset credit and private debt in order to get as close as possible to the (short-term enhanced yield) target,” said a committee document. The committee approved a move to withdraw funds immediately from overweight passive equity allocations, which should be held in cash “to fund these and all other undrawn allocations.”
The document said the principal reasons were that equity markets had performed “extremely well” over the past 12 months, and that the agreed allocations to short-term enhanced yield had not yet been drawn down for investment by the relevant managers. The short-term enhanced yield allocation is only 8.6%, compared to a 15% target.
Further details on the rebalancing strategy could not be learned by press time.