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AusSuper announces six-fold expansion of Churchill partnership

Patrick Buncsi14 December 2023
Churchill AustralianSuper

AustralianSuper has made good on its plan to significantly increase the size of its investment partnership with US capital funding firm Churchill Asset Management, announcing a six-fold funding jump to US$1.5 billion (AU$2.3 billion).

The previously agreed-to investment program with Churchill, an investment specialist affiliate of US asset management giant Nuveen, targets traditional senior and unitranche loans to private equity-backed middle market US companies.

The latest announcement comes almost a year to the date after AustralianSuper’s – the country’s biggest super fund – first investment deal with Churchill as part of its private equity lending program.

Late last year, AustralianSuper announced an initial instalment of US$250 million (AU$381 million), then flagging that this investment would “grow substantially over time”.

Following the shift of its investment management function in-house, the super fund said it is actively seeking to expand its global private credit exposure, particularly in the US.

Its stated ambition, it said, is to triple its exposure “in coming years” to a mix of direct lending by its in-house private credit team as well as strategic partnerships with best-in-class specialist managers such as Churchill.

AustralianSuper reports it currently has US$4.5 billion (AU$6.9 billion) invested in private credit globally.

Churchill is the US$47 billion (AU$71 billion) private capital investment specialist of Nuveen, the asset management arm of US retirement fund TIAA. The firm reports it has grown its third-party separately managed account business to nearly US$9 billion (AU$13.7).

AustralianSuper spruiked Churchill’s “proven 17-year track record of disciplined investing in middle market senior loans across economic cycles”.

Churchill notes it is one of the most active lenders in the industry, investing more than US$14 billion (AU$21.3 billion) annually.

The firm reported “record high activity” in 2022, investing US$11 billion (AU$16.8 billion) in more than 375 transactions across senior lending, junior capital, equity co-investments and private equity fund commitments.

Welcoming the partnership with the “best-in-class loans manager”, AustralianSuper’s head of private credit Nick Ward noted that the current private credit market is ripe for investment.

“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 zero to 5% so you are now looking at yields of 10-12% for senior lending to middle market companies” over a three-year period.

Churchill president and chief executive Ken Kencel, said the firm views the current market as “one of the most attractive investment environments in recent history”, adding that the asset manager was “pleased to provide AustralianSuper differentiated access to our directly originated, proprietary senior loan assets”.

As Australia’s biggest superannuation fund, AustralianSuper counts more than 3.3 million members, managing more than A$300 billion of members’ retirement savings.

 

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