N.J. Admin. Code § 17:4A-10.1

Current through Register Vol. 56, No. 24, December 18, 2024

Section 17:4A-10.1 - Permissible investments

(a) Subject to the limitations in this subchapter, the Board may invest and reinvest PFRSNJ-managed fund assets in private credit investments in any of the following ways:

1. Invest in direct bank loans provided that the borrower:

i. Is not in default as to the payment of principal or interest upon any of its outstanding obligations; and

ii. Has shareholder's equity of at least $ 200 million. Subsequent to purchase, if the borrower defaults or the borrower's shareholder's equity falls below $ 200 million, the investment does not have to be sold;

2. Invest in separate accounts, funds-of-funds, commingled funds, co-investments, and joint ventures that primarily invest in private credit investments, provided that the requirements at N.J.A.C. 17:4A-1.4 have been met;

3. Purchase the common stock of an entity that primarily invests in private credit investments, and whose stock is traded on a securities exchange or over-the-counter market or offered and sold through a private placement; and

4. Purchase exchange-traded funds traded on a securities exchange or the over-the-counter market that primarily invests in private credit investments. For the purposes of this subchapter, exchange-traded funds shall be considered as common stock in determining all applicable limitations in this subchapter.

(b) In addition to making the investments described at (a) above, the Board may:

1. Exercise the rights or conversion privileges of any security acquired pursuant to this subchapter;

2. Retain any distribution received as a result of a corporate action or distribution by a private credit investment, even if such distribution does not meet the requirements of this subchapter;

3. Purchase the preferred stock, whether convertible or not, or rights of an entity, the common stock of which qualifies for investment pursuant to this subchapter;

4. Purchase the convertible debt issue of an entity, the common stock of which qualifies for investment pursuant to this subchapter; and

5. Purchase stock in new public offerings of entities that primarily invest in private credit investments.

(c) Notwithstanding the restrictions in this subchapter, the Board may authorize the purchase of private credit investments on a case-by-case basis if the Board determines such purchase to be in the financial best interest of the PFRSNJ and its beneficiaries and is consistent with the Board's fiduciary responsibility.

(d) Nothing in this subchapter shall preclude the Board from investing PFRSNJ-managed fund assets directly in individual collateralized notes and mortgages pursuant to N.J.A.C. 17:4A-8 and individual mortgage-backed senior debt securities pursuant to N.J.A.C. 17:4A-17.

N.J. Admin. Code § 17:4A-10.1

Adopted by 53 N.J.R. 1147(a), effective 7/6/2021

Recodified from 17:4A-10.2 by 56 N.J.R. 795(a) effective 5/6/2024