Pantheon eyes September for third credit secondaries fund close in 2022

The alternatives manager has already raised more than $1bn of capital to invest in senior debt secondaries through two May fund closes.

Pantheon is adding to its credit secondaries war chest, for which it already collected around $1 billion earlier this year, with an upcoming final closing of an opportunistic credit pool.

The London-based alternatives manager expects to hold an interim close for Pantheon Credit Opportunities Fund II in July, with final close in September, according to documents prepared for the June board meeting of Ventura County Employees Retirement Association.

Fund II is targeting $350 million to invest in North American and European senior, mezzanine, special situations, distressed and opportunistic credit, primarily on a secondary basis, according to the documents. It can invest up to 20 percent in co-investments and 10 percent in strategic primaries.

POC II will target LP-led and GP-led deals, with a focus on assets that generate yield or can be purchased at a discount. The fund has purchased assets at an average effective discount of 13 percent, with more than 50 percent of committed capital already deployed.

POC II has made a 1.35x multiple and a net IRR of 57 percent, top-quartile returns for credit funds of a 2020 vintage, the documents note.

The fund’s management fee is 1.25 percent on invested capital, with a 7 percent hurdle and 10 percent carried interest. It has an eight-year term with three possible one-year extensions.

VCERA approved a $40 million commitment to the fund at the 20 June meeting.

In May, Pantheon held final close on a pair of credit secondaries funds, bringing its total assets under management for the strategy to $2.4 billion.

The firm raised $834 million for Pantheon Senior Debt II, which targets senior debt investments, and €510 million for the second generation of a fund aimed squarely at investors in the DACH region, Secondaries Investor reported.

Pantheon has separate fund families dedicated to senior debt secondaries and opportunistic credit secondaries.

The firm estimates that global private credit secondaries dealflow reached $18.4 billion in 2021, having barely registered only a few years ago. With that increase has come new buyers, with Apollo Global Management, Ares Management, Tikehau Capital and Manulife Investment Management among the groups raising or planning to raise a fund.