Investments
Private Credit
Allocation
5.7%
Annual Return
8.17%
Exposure
$464 M
Benchmark
10.83%
2023 Performance
Private credit generated a net gain of 8.17% in 2023 compared to our benchmark of 10.83% (LSTA +50 basis points). The return was driven primarily from interest income. Almost all of the program is exposed to floating rate debt. Because of this, the portfolio benefited from higher short-term rates and were less sensitive to changes in long-term yields.
The largest driver of return was our co-investment in Antares, the largest mid-market private lender in the United States. Detractors of performance included Brookfield Real Estate Finance V. The difficulties in this fund relate to office exposure across the United States where work-from-home culture since the COVID-19 pandemic has negatively impacted office vacancy.
Investment Approach
Private credit refers to debt investments that are not financed by banks and are not issued or traded in an open market.
Examples include:
- loans to corporate borrowers
- loans made against real estate assets
- lending against contractual revenue streams like royalties
Capital Allocation
By the end of 2023, total investments in private credit increased to $464 million, up from $429 million in 2022. This increase was mainly driven by net investment income, more capital invested in existing funds, and a valuation increase from our co-investment in Antares. The private credit program ended 2023 at 5.7% of total Fund assets. In 2024, our goal is to reach a 7.5% asset allocation. In 2024, we plan to continue growing our investments prudently, aiming to reach the 3% allocation target for this asset class.
Private Credit
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Allocation
5.7%
Annual Return
8.17%
Exposure
$464 M
Benchmark
10.83%
2023 Performance
Private credit generated a net gain of 8.17% in 2023 compared to our benchmark of 10.83% (LSTA +50 basis points). The return was driven primarily from interest income. Almost all of the program is exposed to floating rate debt. Because of this, the portfolio benefited from higher short-term rates and were less sensitive to changes in long-term yields.
The largest driver of return was our co-investment in Antares, the largest mid-market private lender in the United States. Detractors of performance included Brookfield Real Estate Finance V. The difficulties in this fund relate to office exposure across the United States where work-from-home culture since the COVID-19 pandemic has negatively impacted office vacancy.
Investment Approach
Private credit refers to debt investments that are not financed by banks and are not issued or traded in an open market.
Examples include:
- loans to corporate borrowers
- loans made against real estate assets
- lending against contractual revenue streams like royalties
Capital Allocation
By the end of 2023, total investments in private credit increased to $464 million, up from $429 million in 2022. This increase was mainly driven by net investment income, more capital invested in existing funds, and a valuation increase from our co-investment in Antares. The private credit program ended 2023 at 5.7% of total Fund assets. In 2024, our goal is to reach a 7.5% asset allocation. In 2024, we plan to continue growing our investments prudently, aiming to reach the 3% allocation target for this asset class.