Global sovereign and pension funds are ramping up their funding of private debt, nearly up to $9 billion finds since the pandemic outbreak as they seek yield.
In a recent development, the Kingdom of Saudi Arabia’s Public Investment Fund (PIF) said that it has become the primary investor to a $300 million shariah credit fund. Furthermore, the investment unit of the Australian state, Queensland Investment (QIC) has rolled out a private debt team, recently.
2020 was a tricky year for the global sovereign and pension funds as private-debt fundraising plummeted substantially due to the global downturn, along with a slump in commitments towards direct lending.
Activity is expected to rebound this year, but the global situation is still mired by the fear of fresh infections and lockdown. State-owned investors are at the forefront because of their long-term investment strategies.
Global funds are focusing on external partners to operate their portfolio and investments. While some funds such as QIC and ADIA have their own team to operate. QIC’s team is expected to handle infrastructure assets including analysis and management of private debt.
According to QIC, the operations are expected to become a financial stimulus for segments such as real estate, infrastructure and companies rebounding after the pandemic.
Antoine Josserand, head of business development at pan-European private credit manager Pemberton Asset Management, told the media,” Now we are seeing real interest from sovereign and pension funds that weren’t there a couple of years ago. It’s a reflection of the fact that they recognise the merit in terms of diversification of their alternative asset bucket.”