Andrew Hedlund
The US pension plan discussed five-year scenarios that include annual commitments of $400m, $550m and $700m.
As US federal leveraged lending guidance statutes have become a thing of the past, banks are showing a willingness to compete with direct lenders.
The alternative asset behemoth is well positioned for a downturn as it monitors portfolio liquidity and credit lines, the firm’s co-president said.
Volatility has made unitranche an appealing option in a market where some syndicated deals are requiring an increase in pricing to get across the finish line.
The alternative lender backs both sponsored and non-sponsored businesses with its flagship fund series.
The real estate lender is charging a 1.5% management fee, according to Arkansas pension fund documents.
In the US, unitranche loans have given the senior-junior debt capital structure a run for its money in recent years, but mezzanine lenders are still finding deals.
Ironically, BDC first-lien assets have increased in recent years, but a larger share of BDC assets are considered distressed than the overall secondaries market.
LPs and bankers had some advice for GPs on competitive differentiators, workout processes and predictions of private debt performance.
Unitranche has found favour post-GFC as a result of its simplicity. But investors should make sure not to ignore it goes much deeper in the capital structure than traditional first lien senior secured debt.