Connecticut carves out $145 mln for in-state investment

  • Forms $355 mln in accounts with J.P. Morgan, Fairview and Balance Point 
  • $29.4 bln pension earmarks $145 mln for PE, VC, debt in-state
  • Initiative “long in the making” says State Treasurer 

“This is, by no means, merely an altruistic policy. It’s about making profitable investments that have the ancillary benefit of a positive macroeconomic impact on our state,” said Connecticut Treasurer Denise Nappier in a statement. “Performance will be measured, first and foremost, by risk-adjusted returns, followed by other factors such as job creation and retention and overall economic growth.”

The $29.4 billion pension system created a unique structure for two of the accounts. The system carved out $70 million of the combined $280 million it re-upped to J.P. Morgan Private Equity Group and Fairview Capital Partners for private equity and venture capital co-investments in companies with operations in Connecticut.

J.P. Morgan will use $50 million of the $150 million Connecticut re-upped to the firm for in-state co-investments, Barrett said. The remaining $100 million will operate as a fund of funds without a geographic mandate.

Connecticut structured a similar account with Fairview. The West Hartford–based firm will dedicate $20 million of a $180 million re-up to investments in early-stage Connecticut companies. The remaining $160 million will be allocated to venture capital funds.

The co-investment strategy expands on both firms’ existing mandates with Connecticut. The state formed its first separate account with J.P. Morgan in 2010. That vehicle, a $110 million fund of funds, invested in small and middle market buyout funds based in Connecticut. The fund returned 11.7 percent as of Dec. 31, according to a Connecticut press release.

Fairview has returned 12.7 percent since taking over Connecticut’s venture capital program in 2004.

In addition to its re-ups to J.P. Morgan and Fairview, Connecticut formed a new relationship with Balance Point Capital Partners. The retirement fund allocated up to $75 million to a fund that will provide loans to middle market companies with operations in Connecticut.

Balance Point has already identified 2,600 companies with revenues between $5 million and $25 million, which should provide “an extensive array” of investment opportunities for the vehicle, called Connecticut Growth Capital, LLC, Nappier said in a press release.

Connecticut has invested approximately $235 million in Connecticut-based companies since 1999. Those investments have returned $1.60 for every $1 invested, according to a press release.