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ISERS staff outlines private‑credit pipeline; Sixth Street funds, asset‑based finance and sports investments under review
Summary
Staff briefed trustees on private‑credit candidates to fulfill an 8% target, including an asset‑based finance fund and a proposed Sixth Street diversified credit vehicle; trustees discussed sports‑franchise investments as a novel opportunity within opportunistic allocations.
ISERS investment staff presented an informational memo on May 21, 2025 describing private‑credit options to help fulfill an 8% diversified credit target for the pension fund and discussed a potential Sixth Street strategy that would combine structured lending and minority stakes in sports and live‑entertainment franchises.
The item was informational; trustees were not asked to approve a new commitment at the meeting but staff sought feedback and authority to continue due diligence on candidate funds.
Brian summarized the background: an asset‑liability study completed in October 2023 supported reallocating 2% from international equity into private credit and authorized up to $80 million in commitments. Staff has completed a $10 million investment in a BDC and is considering further commitments. He described two funds under diligence:
- Beacon (asset‑based finance): a strategy focused on loans secured by company assets (for example, aircraft engines or other collateral). Staff described asset‑based lending as a large, expanding private credit market that typically targets low‑double‑digit IRRs and limited leverage, and said legal review of fund documents was underway.
- Sixth Street diversified credit / structured sports and live entertainment: staff said Sixth Street has completed minority stakes in major franchises (examples cited in discussion included the San Francisco Giants and a reported 20% stake in the Boston Celtics) and that the firm is exploring structured financing across sports and entertainment. Brian said these opportunities pair lending and structured equity elements and that due diligence would focus on governance, revenue streams (media rights, sponsorships, ticketing), and valuation. He said more detail and follow‑up meetings with Sixth Street were scheduled.
Trustees asked practical questions. One trustee asked who would receive season tickets or suite rights in a sports‑franchise investment; staff answered lightheartedly that “those go to the chair,” illustrating ancillary governance and public‑expectation issues that would need formal handling in any investment agreement. Staff said they would confirm existing opportunistic exposure (noting some prior opportunistic vehicles may already include small sports holdings) and would return with more detailed legal and operational due diligence before asking for board commitment.
Ending: Staff will continue due diligence on the Beacon asset‑based finance vehicle and on Sixth Street’s diversified credit / sports strategies and report findings for trustee review; no commitments were approved at the May 21 meeting.
