AustralianSuper has increased the program size of its partnership with Churchill Asset Management, a US$47 billion ($72 billion) private capital investment specialist affiliate of Nuveen, to US$1.5 billion ($2.3 billion).
According to AustralianSuper, the investment program targets senior and unitranche loans to private equity-backed US middle market companies and builds on the partnership established in December 2022.
Ken Kencel, Churchill president and CEO, said the asset manager is excited to grow its partnership with AustralianSuper.
“AustralianSuper’s latest instalment reinforces the strength of our strategic partnership and their confidence in both our strategy and the private credit market. We believe we are currently in one of the most attractive investment environments in recent history, and we are pleased to provide AustralianSuper differentiated access to our directly originated, proprietary senior loan assets,” Mr Kencel continued.
According to data released by Nuveen earlier this year, over 80 per cent of global institutional investors are planning to expand their reach for yield.
Meanwhile, nearly half of those respondents are revisiting their traditional fixed income allocations, and the next most popular course of action is investment into private credit.
AustralianSuper confirmed its intention to increase its investments in private credit, noting the asset class’s potential to provide attractive income, returns and stability during uncertain economic times.
Currently, the fund has over US$4.5 billion ($7 billion) invested in private credit globally, with the stated ambition to triple its exposure in the coming years.
Nick Ward, AustralianSuper head of private credit, added: “We believe the current environment is especially appealing to increase our investments in private credit.”
“Lending margins have increased due to heightened macroeconomic risks, base rates have gone from 0–5 per cent so you are now looking at yields of 10–12 per cent for senior lending to middle market companies,” Mr Ward said.
“We believe Churchill is a best-in-class loans manager. Together with their long track record and being able to underwrite loans with knowledge of the higher rates environment represents an attractive risk-adjusted proposition.”
Nuveen managing director and head of Australia, Andrew Kleinig, said there has been a well-documented increase in the search for yield around the world.
“This rings especially true in Australia’s superannuation market as ever-growing funds, and an ageing population, mean post-retirement stage members are driving increased demand for consistent income opportunities,” Mr Kleinig explained.
“Nuveen Private Capital is uniquely equipped with specialist partners, including Churchill and Arcmont Asset Management in Europe, to meet the demand for private capital from AustralianSuper and other local institutional investors.”