LPFA manager selection leads to framework for alternative credit

The London Pensions Fund Authority (LPFA) has selected the global alternative investment manager Apollo Global Management as its alternative credit manager.

Apollo will oversee a £150 million allocation to alternative credit, including distressed debt, real estate debt, leveraged senior loans and private lending. The mandate will aim to produce an absolute return by investing across higher yielding debt markets, mainly developed markets but with some scope to allocate to emerging markets.

The LPFA chose Apollo from approximately 35 managers and then shortlisted four before the final selection. The other shortlisted managers were Ares Management, Babson Capital and GSO Capital. The LPFA said that its tender process has created an alternative credit manager framework for other LGPS funds, so they do not have to complete a full European tender process. The framework means other funds can choose one of the four shortlisted managers and will remain operational until February 2019.

The mandate will be unconstrained and target absolute returns by investing across a number of higher yielding debt markets. It is expected that the majority of investments will be made within developed markets; however, there is also scope for allocations to emerging markets.