AustralianSuper ups investment in Nuveen affiliate

AustralianSuper has increased its investment partnership with Churchill Asset Management, an investment specialist affiliate of Nuveen, to US$1.5 billion ($2.3 billion).

The superannuation fund’s investment program with the asset manager was established in December 2022 and targets senior and unitranche loans to private equity-backed US middle market companies.

With more than US$4.5 billion ($7 billion) worth of investments in private credit globally, AustralianSuper has previously expressed its ambition to triple its exposure to the asset class in coming years to provide attractive returns and stability amid economic uncertainty.

This will be achieved through a mix of direct lending by its internal private credit team and external partnerships, such as its one with Churchill Asset Management.

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The US$47 billion private capital investment specialist, who first partnered with Nuveen as an affiliate in 2015, has 17 years’ experience across senior lending, junior capital, equity co-investments, and private equity fund commitments. 

Nick Ward, AustralianSuper head of private credit, said he believes the current environment is particularly attractive to increase investments towards private credit.

He explained: “Lending margins have increased due to heightened macro-economic risks, base rates have gone from zero to 5 per cent so you are now looking at yields of 10–12 per cent for senior lending to middle market companies.

“Together with Churchill’s long track record and being able to underwrite loans with knowledge of the higher rates environment represents an attractive risk-adjusted proposition.”

Andrew Kleinig, managing director and head of Australia at Nuveen, was delighted to expand the successful partnership with the fund.

“We’ve seen a well-documented increase in the search for yield around the world. This rings especially true in Australia’s superannuation market as ever-growing funds, and an ageing population, mean post-retirement stage members are driving increased demand for consistent income opportunities,” he described.

Nuveen’s 2023 EQuilibrium survey of 800 global institutional investors recently discovered that over 80 per cent are planning to increase their reach for yield. 

Nearly half of those surveyed said they are reconsidering their traditional fixed income allocations, with private credit investment proving to be the next most popular course of action.