Insignia Financial’s pensions unit eyes global private credit

Insignia Financial’s pensions business is gearing up to deploy billions of dollars into private credit globally.

The Australian financial services firm’s pensions unit, which oversees around A$180bn (£94.8bn) of retirement savings, is in the final stages of appointing external managers to increase its private credit allocation.

Its current exposure to the asset class is close to zero but this will be increased to between three and five per cent of its portfolio in the next year, according to a report in Bloomberg.

This would be the pensions unit’s first meaningful expansion into private credit outside of Australia. The business has a five to six per cent allocation to private credit domestically.

Read more: New Australian private credit firm launches first fund

MLC Asset Management chief investment officer Dan Farmer, who manages the majority of Insignia’s pensions business, told Bloomberg that the fund is primarily looking for private credit deals in the US and Europe.

MLC is part of the Insignia Financial Group.

The private credit sector is growing quickly in Australia, with the country’s pension funds among the institutional investors looking to tap into its high risk-adjusted returns while diversifying their portfolios.

“There’s been a lot of capital driving into that space,” Farmer said. “We see an opportunity, but we think we’ve got to be very selective and invest and choose our managers very, very carefully.”

Farmer’s comments come after Australian pension fund UniSuper increased its portfolio exposure to private credit earlier this year.

And last December, AustralianSuper, Australia’s largest superannuation fund, revealed that it was increasing its exposure to private credit by boosting the size of its partnership with Churchill Asset Management to $1.5bn (£1.2bn).