IMCO Invests US$500 Million With Antares Capital
IMCO put out a press release stating it is adding private direct lending to its Global Credit portfolio with US$500M investment with Antares Capital LP:
Investment Management Corp. of Ontario, a money manager for pension funds in the Canadian province, tapped Antares Capital LP to invest US$500 million in loans to be used by private equity firms to finance transactions.
The portfolio will target between 75 and 100 transactions U.S. and Canadian issuers operating in the mid-market, according to an emailed statement seen by Bloomberg. IMCO selected Antares as its private debt manager after a competitive process.
“We are building out the global credit strategy for the long term,” Jennifer Hartviksen, IMCO’s managing director of global credit, said in an interview. “As we surveyed the landscape, we identified Antares as being the best fit for us because of that superior performance generated by a demonstrated low loss rate over many cycles.”
Pension funds and other large institutions are deploying more capital to private credit as they seek higher yields to shield themselves from the accelerating inflation. Antares’s mandate will be followed by others at IMCO that will be focused on real estate debt, emerging market debt and other asset classes, Hartviksen said.
Early this year, IMCO assigned a separate US$500 million mandate for Ares Management Corp. to invest in a diversified multi-strategy credit portfolio. The firm’s credit portfolio is expected to grow to $8 billion (US$6.5 billion) by 2025 from $4.6 billion at the end of 2020.
IMCO was created about five years ago to consolidate several public-sector funds in Canada’s largest province under one manager. IMCO managed $73.3 billion in assets as of the end of 2020. It posted an overall gain of 5.4 per cent for 2020.
The Investment Management Corporation of Ontario (“IMCO”) is investing US$500-million with Antares Capital LP (“Antares”), a leading provider of financing to mid-market private equity-backed companies in North America. IMCO’s platform investment forms the foundation of the direct lending component of its Global Credit strategy and aims to build a diverse portfolio of sponsor-backed loans in the middle-market, focusing on U.S. and Canadian borrowers. The portfolio will be diversified across industry and sponsors and will target 75-100 issuers.
Antares is a private debt credit manager and a leading provider of innovative financing and investment solutions for PE-backed borrowers and investors. With US$42.9-billion of capital under management and administration, it has one of the industry’s largest and longest-tenured portfolios of mid-market companies. IMCO selected Antares as its private debt manager following a competitive process.
“Private debt lending provides stable returns and aligns well with IMCO’s tolerance for illiquidity and our long investing horizon,” said Jennifer Hartviksen, Managing Director, Global Credit, IMCO. “Antares has a 25-year track record investing across markets and industry cycles, and our new direct lending program will benefit from Antares’ broad suite of lending capabilities.”
“We are very pleased to utilize our market leadership position and select access to high-quality private market investment opportunities to support IMCO in achieving their clients’ risk-reward objectives,” said Vivek Mathew, Head of Asset Management and Funding, Antares Capital. “IMCO is a like-minded, purpose-driven institution and we’re proud to have customized a solution allowing their clients to capitalize on the growth we drive within the middle market.”
IMCO’s Global Credit portfolio invests across a range of public and private credit market segments including corporate bonds and loans, real estate and infrastructure debt, off-balance sheet financing loans, emerging markets debt, high yield bonds and leveraged loans to generate higher risk-adjusted returns than traditional fixed income, adding diversification benefits to a total portfolio for IMCO’s public sector clients. The Global Credit program is differentiated by its broad approach to portfolio construction, making strategic allocations to liquid/illiquid securities, geographies and across the risk spectrum. Our experienced team has decades of diverse experience investing across credit segments, geographies and at all stages of the credit cycle. As of December 31, 2020, IMCO’s Global Credit portfolio had $4.6 billion AUM. The portfolio is expected to grow to $8 billion or more by 2025.
The Investment Management Corporation of Ontario (IMCO) manages $73.3 billion of assets on behalf of its clients. IMCO’s mandate is to provide broader public sector institutions with investment management services, including portfolio construction advice, better access to a diverse range of asset classes and sophisticated risk management capabilities. IMCO is an independent organization, operating at arm’s length from government and guided by a highly experienced and professional Board of Directors. Follow us on LinkedIn and Twitter @imcoinvest
With $42.9 billion of capital under management and administration as of June 30, 2021, Antares is a private debt credit manager and a leading provider of financing and investment solutions for middle-market private equity-backed borrowers and investors. In the first half of 2021, Antares issued approximately $11 billion in financing commitments across more than 135 transactions. Since its founding in 1996, Antares has built one of the industry’s largest and longest-tenured portfolios of middle market companies. Due to its steadfast support of this crucial sector of the economy, Antares has maintained the Refinitiv #1 bookrunner league table position for U.S. sponsored middle market deals since 2010. Through its Asset Management & Funding team, Antares offers investors the opportunity to invest in collateralized loan obligations, funds and separately managed accounts. Antares is committed to championing middle market growth throughout market cycles. Doing so allows its people, partners and communities to achieve their full potential. The company maintains offices in Atlanta, Chicago, Los Angeles, New York and Toronto. Visit Antares at www.antares.com or follow the company on LinkedIn at http://www.linkedin.com/company/antares-capital-lp. Antares Capital is a subsidiary of Antares Holdings LP, (collectively, “Antares”).
This is a solid deal with a solid partner. Antares is widely regarded as one of, if not the very best private lenders in the mid market space.
Take the time to read more about Antares Capital here:
For more than two decades, Antares has delivered specialized capital solutions to help our private equity sponsors and their portfolio companies grow. Consistently, reliably. Through changing market cycles. With one of the largest portfolios of U.S. middle market, private-equity backed companies, we are entrenched in the market.
Our scale and experience have also made us a leading North American credit manager. Helping investors diversify their portfolios through access to middle market loans originated by Antares which we believe can offer attractive risk-adjusted returns.
With a time-tested, credit-based approach and reliable execution, we aim to deliver results for all our clients. At Antares we are proud to be different by being consistent.
Also take the time to see the history of the company. For example, I bring this to your attention:
In 2005, Antares was acquired by GE Capital for more than $5 billion.
Then, ten years later, CPP Investments acquired Antares in a transaction valued at $12 billion.
Since then, the company has grown significantly.
Five years ago, CPP Investments sold sold a 16% equity stake in Antares Holdings (Antares) to a private investment fund managed by Northleaf Capital Partners (see details here).
It's fair to say that along with Highway 407, Antares Capital has been one of CPP Investments' most important assets.
In short, Antares prints money in the mid-market private lending space, they really are among the cream of the crop.
Why am I providing you with this short backgrounder?
Because I want you to understand why IMCO just invested US$ 500 million with Antares.
Neil Murphy, IMCO's Vice President Corporate Communications shared this with me earlier:"We are super proud of this one and the quality of the partnership Antares represents for us and our clients."
Keep in mind IMCO is a big pension fund, it now manages over $75 billion in assets, it has a developed a great private lending platform where it invests in top funds in the space.
Back in May, I covered another huge deal, IMCO's US$ 500 million investment in Ares to invest in credit deals.
Christian Hensley is the Senior Managing Director, Equities and Credit. He oversees IMCO’s private equity, public equities and global credit programs, which are executed both internally and through external managers.
Jennifer Hartviksen who joined IMCO in 2020 is responsible for the global credit asset class and she reports to Christian.
She explains this deal perfectly: “We are building out the global credit strategy for the long term. As we surveyed the landscape, we identified Antares as being the best fit for us because of that superior performance generated by a demonstrated low loss rate over many cycles.”
In private debt, it's all about risk-adjusted returns and because there's illiquidity involved, it's best to go with experienced managers who know what they're doing.
IMCO is building out a great credit platform and this deal fits perfectly into its credit asset mix.
Interestingly, Tyler Lindblad, senior managing director and Chief Credit Officer for Antares Capital, was recently quoted as stating this: “We’re seeing very robust deal activity, particularly coming out of the COVID period where activity was muted.”
I firmly believe deal activity will pick up significantly going into 2022 and even though there are risks, if you're invested with experienced managers, you can weather any storm ahead.
Alright, let me wrap it up there.
Below, an excellent recent discussion on mid-market lending that gives you a good overview of the sector and what are the opportunities and challenges.