In a move that marks a significant development in the private credit market, two of Canada’s largest pension organizations, AIMCo and PSP Investments, have announced a joint venture aimed at increasing their market presence and capitalizing on the growing demand for private credit investments.
A Mutually Beneficial Endeavour
According to Evan Siddall, Chief Executive Officer (CEO) of AIMCo, this partnership is a win-win situation for both organizations. "It’s the intensity and the scale of their business relative to ours that we can just learn from … and, with our scale, they can benefit from having our clients interested in that space too," he said.
This collaboration is part of the strategy adopted by AIMCo, which has $136.6 billion under management at the end of June. Siddall hinted in the past that partnerships and collaboration will be crucial for the Alberta pension and endowment organization to fully participate globally in areas including energy transition and carbon reduction.
A Growing Demand for Private Credit Investments
The private credit market has been growing rapidly, driven by increasing demand from investors seeking higher yields and reduced volatility. The joint venture between AIMCo and PSP Investments is a response to this trend, with both organizations looking to expand their presence in the market.
PSP Investments launched its credit investment practice in November 2015 and has $21.9 billion in net assets under management from offices in New York, London, and Montreal. Its focus has been on non-investment grade credit investments in North America and Europe across private and public markets, as well as rescue financing opportunities.
A Strong Platform for Sourcing Opportunities
Deborah K. Orida, CEO of PSP Investments, described the credit investment market as "fast-moving" and said that the pension organization’s 40-strong team of credit investment professionals is excited to continue sourcing opportunities on their well-established platform.
"That platform has delivered double-digit returns in a historically low-rate environment since inception, so we think we’re starting from a great place," she said. "This joint venture, or partnership, is an opportunity for us to align with a like-minded, long-term investor in Canada to have our combined funds increase our market presence."
A New Era of Collaboration
The joint venture between AIMCo and PSP Investments marks a new era of collaboration among Canada’s largest diversified pension plans. This partnership demonstrates the power of collaboration among members of the Maple 8, a term applied to a handful of the country’s largest diversified pension plans that includes the Canada Pension Plan Investment Board, the Caisse de dépôt et placements du Québec, and the Ontario Teachers Pension Plan Investment Board.
With the departure of Oliver Duff, who was promoted to global head of credit investments at PSP Investments, the organization has also announced Simon Marc as its new global head of private equity and strategic partnerships.
A Growing Trend in Private Credit Investments
The trend towards private credit investments is growing rapidly, driven by increasing demand from investors seeking higher yields and reduced volatility. The joint venture between AIMCo and PSP Investments is a response to this trend, with both organizations looking to expand their presence in the market.
As Siddall noted, "This is a mutually beneficial endeavour." With the combined resources of both organizations, they will be able to increase their market presence and capitalize on the growing demand for private credit investments.
Conclusion
The joint venture between AIMCo and PSP Investments marks a significant development in the private credit market. This partnership demonstrates the power of collaboration among Canada’s largest diversified pension plans and highlights the growing trend towards private credit investments.
As investors continue to seek higher yields and reduced volatility, the demand for private credit investments is expected to grow rapidly. The joint venture between AIMCo and PSP Investments positions both organizations well to capitalize on this trend and increase their market presence.
References:
- "PSP Investments launches credit investment practice" (November 2015)
- "AIMCo CEO signals interest in Ottawa’s latest bid for private capital to back green projects"
- "Pension fund strategy that caused U.K. chaos less prevalent in Canada, insiders say"
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