by Andrés Ramos, Content Marketing Specialist – eVestment Private Markets
Market dislocation drives investor interest in private debt
According to the year-end edition of our eVestment Private Markets Monthly Monitor, private debt saw $33.7 billion in reported commitments from 79 different public pension plans in 2020, a 31% increase from the segment’s final 2019 figure. The 2020 total was comprised of 319 commitments representing a 46% increase compared 2019.
While overall activity increased, on a per commitment basis, allocation sizes dropped 10% to an average of $106 million. All this suggests that pension plans sought to take advantage of market dislocation caused by the pandemic by increasing commitments to private debt across smaller commitments.
Let’s look at some of the top public pension plan allocators in the asset class for the year.
Top Private Debt Allocators
CalPERS was the most active private debt allocator in the year with $4.5 billion in commitments. The plan’s $2.0 billion commitment to Goldman Sachs’ West Street Solutions Fund was the largest reported to any commingled fund in 2020.
Virginia Retirement System was another active allocator to private debt strategies in 2020 with a reported $4.3 billion in commitments. In addition to allocations to Oaktree and Ares, the pension plan committed $1.0 billion to The Carlyle Group. Plan documents describe a broad mandate for the allocation stating that the fund, “will invest opportunistically across credit markets, with a focus on private credit investments.” The plan’s 2020 activity in the asset class is a huge shift from 2019 where they allocated only $550 million to private debt strategies.
After CalPERS and Virginia Retirement System, New York State Common Retirement Fund (NYSCRF) was the biggest allocator to private debt on a per commitment basis, with an average commitment size of $340 million. In addition to commitments to commingled funds managed by Vista Equity Partners, Neuberger Berman, and Avenue Capital, NYSCRF invested via separate account vehicles managed by Whitehorse Liquidity Partners and Pearl Diver Capital. The separate accounts are uniquely structured as fund-of-funds that invest in the various funds operated by the respective fund managers.
In terms of number of commitments, Florida SBA was the most active allocator in 2020 with 19 commitments to 17 different fund managers.