Strathclyde Pension Fund, Glasgow, Scotland, hired private corporate debt and real estate debt managers to run a £900 million ($1.2 billion) allocation, according to meeting minutes on the fund's website.
The £21 billion pension fund appointed Alcentra, Barings and Partners Group to manage private corporate debt mandates with initial allocations of 1.25%, 1.25% and 1%, respectively, of the pension fund's total assets.
Strathclyde wants the managers to focus on investing in first- or second-lien senior secured corporate loans with subinvestment-grade credit risk. The managers are expected to deliver a return of the London interbank offered rate plus between 4% and 6% per year net of fees and other costs, according to the RFP that was issued in December.
ICG Longbow was also hired to manage private real estate debt, with an initial allocation of 1% of the pension fund's assets.
ICG Longbow will invest in senior secured direct and whole loans, lending against commercial real estate in the U.K. and/or Europe. The manager is expected to deliver LIBOR plus between 4% and 5% per year net of fees and costs, according to a separate RFP that was also issued in December.
All four managers embed environmental, social and governance considerations into their investment processes, the minutes said.
Strathclyde has 35% of its asset allocation in enhanced yield strategies.