Rhode Island consolidates private equity and private credit

Staff said the change would allow the system to be more selective about its opportunistic private debt investments.

Rhode Island State Treasury decided to consolidate its private equity and opportunistic private credit investments, a spokeswoman confirmed to Buyouts.

The move will allow the state to continue investing in private credit opportunities without having to constantly meet an allocation, staff said in a memo for its March 24 meeting.

“Staff believes it is sensible to deploy capital to these strategies periodically as market conditions or manager availability permit, rather than through a consistent annual pacing plan,” the memo said.

Before the change, Rhode Island’s private equity target was 11.25 percent and its opportunistic private credit target was 1.5 percent. Along with non-core real estate, the two asset classes made up a larger bucket called private growth.

Now, opportunistic private credit will be rolled into the private equity allocation, and its target will be set at 12.5 percent.

This allocation would allow Rhode Island to “avoid potentially weak vintages during economic expansion periods,” the memo said.

The fund’s opportunistic credit managers include Clearlake Capital Group, Davidson Kempner Capital Management, Centerbridge Partners and Oaktree Capital Management, the Treasury told Buyouts.

As Buyouts has reported, Rhode Island has made several other recent private debt commitments, including to the most recent fund and business development corporation from Owl Rock Capital Partners and an Atalaya Capital Management senior debt fund.

As of February 28, Rhode Island’s private growth portfolio was valued at just over $1 billion and had an 11.95 return over one year and 13.62 percent over three years.

Action Item: read the Rhode Island staff asset allocation memo here.