Principal Financial Group has partnered with Barings on a new $1bn (£745m) portfolio finance initiative to expand its private credit offering. 

Barings will act as the asset originator manager, providing investment-grade private credit products that will be available in Principal’s portfolio.

Read more: Principal’s direct lending business passes $3bn

The investments will take the form of a separately managed account and a co-investment structure, with the latter managed by Principal’s in-house asset manager Principal Asset Management, which manages approximately 95 per cent of the Principal general account portfolio.

“This announcement is part of our broader approach to private markets at Principal: selectively building partnerships that complement our in-house underwriting and portfolio management expertise in differentiated asset structures and securities,” said Kamal Bhatia, president and chief executive officer of Principal Asset Management.

The asset manager specialises in real estate, mid-market direct lending, private corporate, and infrastructure credit.

Read more: Barings prepares second European private credit CLO

“We continue to look for ways to evolve and diversify our private credit portfolio in a value-enhancing manner,” added Ken McCullum, executive vice president, chief risk officer at Principal Financial Group. 

“This partnership deepens our footprint in the private markets ecosystem, by aligning our strong insurance entity and in-house asset management platform with the strengths of an experienced external manager.”

Barings, which is a subsidiary of MassMutual, manages $456bn of global assets, with capabilities across public and private markets in fixed income, tangible assets, and capital solutions.

Read more: Private credit funds adapting to rising demand for liquidity