Assisted Search: Private Debt – PD150824Deadline: Friday 30th August 2024
CAMRADATA are running an Assisted Search for a UK endowment that would like to work with managers that have racial equity as a theme for allocation. The managers’ racial equity focus can be situated within the themes of housing, social mobility, health and climate / just transition. Beyond leveraging it as a theme for allocation, managers who have racial equity incorporated from the perspectives of stewardship, workforce and sustainability in their organisation may also be considered. Ultimately, the endowment’s vision is to catalyse equitable access to financial resources for Black and Minority Ethnic-led organizations & their communities to consequently enable enhanced social, economic, and cultural well-being. This search is specific to Private Debt fund managers. This asset class will comprise up to 10% of the total portfolio (£20m targeting a 4% average return). We seek private debt fund managers who can provide steady income and capital preservation while aligning with the endowment’s racial equity goals. The emphasis is on managers who can demonstrate both strong credit expertise and a commitment to supporting Black and Minority Ethnic-led businesses and communities.
All funds being proposed must be listed in CAMRADATA Live and returns must be up to date i.e. to 31st March 2024.
Assisted searches are run on behalf of institutional investors with specific search requirements. These are as follows:
| Asset Class | Private Debt |
| Deadline | 30th August 2024 |
| Management Approach | Active |
| Geographical Focus | – UK-based asset manager preferred – Global investment mandate acceptable |
| Target Return | – Net IRR: 8-12% (typical for private debt, lower than private equity but higher than public fixed income) – Yield: 6-8% annual cash yield |
| Currency | GBP (for reporting, though underlying investments may be in various currencies) |
| Fund Structure | Closed-end private debt fund or evergreen structure with periodic liquidity windows |
| Size of Potential Mandate | Up to £2m (10% of the £20m total portfolio) |
| Track Record | – Established managers: Minimum 3 years in private debt – Open to emerging managers with strong credit expertise and focus on racial equity |
| Key Themes | – Racial equity as a primary investment focus – Sub-themes: housing, social mobility, health, climate/just transition |
| Investment Criteria | – Lending to Black and Minority Ethnic-led businesses – Focus on enterprises serving Black and Minority – Ethnic communities Commitment to ESG standards in lending practices |
| Fund Manager Characteristics | – Preference for Black and Minority Ethnic-led management teams – Demonstrated incorporation of racial equity in firm’s practices (stewardship, workforce, sustainability) |
| Transparency Requirements | – Detailed fee structure (management fees, carried interest, etc.) – Regular reporting on social impact metrics – Clear communication on liquidity terms – Quarterly reporting on financial performance, including interest coverage and default rates |
| Team Profile | Detailed information on team diversity, expertise, and track record |
| Legal Structure | Limited Partnership, LLC, or other structures suitable for UK endowment investment |
| Investment Types | – Senior secured loans – Mezzanine debt – Unitranche facilities – Potential for selective opportunistic strategies (e.g., distressed debt) |
| Fund Life | 8 years, potentially with extension options |
| Investment Period | 2- 3 years |
| Benchmark | – Relevant private debt index (e.g., Cliffwater – Direct Lending Index) in addition to absolute return targets |
| Vintage Year | Consider funds launching within the next 12-18 months |
| Due Diligence | Thorough credit process and ESG/impact-focused due diligence |
| Co-investment Rights | Potential for direct co-investment opportunities in larger deals |
| Impact Measurement | Clear methodology for measuring and reporting on racial equity impact in lending practices |
| Risk Management | Robust underwriting process Diversification across sectors and individual borrowers Clear processes for managing defaults and workouts |
| Liquidity Provisions | Defined distribution schedule, potential for reinvestment |
| Interim Performance Metrics | Quarterly updates on interest received, principal repayments, and any impairments |
| Alignment with Overall Portfolio | Demonstration of how the fund complements public fixed income allocation and overall portfolio construction |
| Timeline | Prepared to make commitment within 6-12 months |
| Sector Focus | Diversified, but with emphasis on sectors aligned with racial equity themes |
| Minimum Commitment | Flexibility on minimum commitment to allow for appropriate allocation size |
| Loan Characteristics | Average loan size Typical loan terms (duration, interest rates, covenants) Security and collateral requirements |
| Default Management | – Clear processes for managing potential defaults and protecting investor capital – Reporting: Detailed reporting on loan book performance, including any ESG or impact metrics related to racial equity – Currency Hedging: Strategy for managing currency risk if lending in multiple currencies |
Please submit relevant vehicle(s) to assistedsearches@camradata.com