LPFA creates LGPS alternative credit manager framework and appoints Apollo as alternative credit manager

The London Pensions Fund Authority (LPFA) announced today that it has created a national framework that will allow other Local Government Pension Schemes (LGPS) to select from four alternative credit managers without having to complete a full European tender process.

The framework is made up of Apollo Capital Management, Ares Management, Babson Capital and GSO Capital, and will remain operational until February 2019. The successful managers were selected after a thorough tender process, which saw approximately 35 managers shortlisted to four.

Following the creating of this framework, LPFA selected Apollo Capital Management as its alternative credit manager.

Subject to final documentation, Apollo will oversee the LPFA’s £150 million allocation to alternative credit, including, distressed debt, real estate debt, leveraged senior loans and private lending.

The mandate will be unconstrained and target absolute returns by investing across a number of higher yielding debt markets. It is expected that the majority of investments will be made within developed markets; however, there is also scope for allocations to emerging markets.

Apollo’s appointment was made after a thorough two-part tender process, which saw approximately 35 managers shortlisted to four, before the final selection. Apollo’s expertise in alternative credit, strong investment track record and breadth of credit solutions will be essential in helping LPFA enter the alternative credit market. The tender process undertaken by LPFA has also created a national framework that will allow other Local Government Pension Schemes to select any of the successful shortlisted managers for similar work in the future, without having to complete a full European tender process.