FROM: Don Pierce, Chief Investment Officer
SUBJECT: Arcmont Asset Management - Master Custody Account
RECOMMENDATION:
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Recommend that the Board approve the establishment of a Master Custody Account (MCA) with Arcmont Asset Management, including a $200 million initial allocation, subject to completion of due diligence and legal documentation.
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BACKGROUND:
Starting in 2024, staff undertook an effort to broaden the SBCERA portfolio's capabilities in the European credit universe. As previously communicated, this included an in-depth process to survey the market and identify target areas of interest. Beginning with 62 survey respondents, staff conducted focused diligence on 10 managers and identified 4 managers that aligned with SBCERA's objectives from a strategy and firm perspective.
Staff is recommending that SBCERA establish a new Master Custody Account ("MCA") with Arcmont Asset Management ("Arcmont" or "Firm"), investing in SBCERA-approved transactions across the following strategies, with an initial focus on European middle-market credit opportunities:
- Capital Solutions: This strategy will form the core of SBCERA's MCA relationship with an expected deployment of $100-$150 million over a three-year period.
- Direct Lending: SBCERA will opportunistically invest in the Direct Lending strategy with a deployment of $0-50 million over a three-year period.
- NAV ("net asset value") Financing: SBCERA will opportunistically invest in NAV Financing opportunities deploying $0-$50 million over a three-year period.
Arcmont Asset Management is a London-based European middle-market focused credit manager. The firm was founded in 2011 by CEO Anthony Fobel as a direct lending-focused private credit manager and has grown capabilities in private credit since formation. Today, the firm continues to focus on European private credit across strategies in direct lending, capital solutions, NAV lending, and impact investing. In March 2023, Nuveen, the inve...
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