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Connecticut mulls $100 mln commitment to Welsh Carson XII

  • Welsh Carson held fund open after closing on $3 bln target
  • Connecticut is an LP in several Welsh Carson funds
  • Fund XI netted 15 pct IRR through December

Connecticut State Treasurer Denise Nappieris considering a $100 million re-up to Welsh, Carson, Anderson & Stowe’s latest flagship fund, spokesman David Barrett said in an email.

Welsh, Carson, Anderson & Stowe XII hit its $3 billion target in late 2015. The firm kept the vehicle open to continue fundraising toward its $3.5 billion hard cap, one market source told Buyouts in December.

Nappier presented Fund XII as an investment opportunity at an April 13 Investment Advisory Council meeting. The council advises the state treasurer, the state’s principal fiduciary, on the management of the Connecticut Retirement Plans and Trust Funds.

The $29.7 billion public pension investment portfolio has committed $350 million to Welsh Carson funds since 1998, according to pension documents. Connecticut’s $100 million commitment to Fund XI, a $3.8 billion 2009 vintage, netted a 15 percent internal rate of return through December 31, according to Barrett.

If Nappier moves forward with the commitment, Connecticut would join the California Public Employees’ Retirement SystemMinnesota State Board of Investment and Greenwich, Connecticut’s retirement system as LPs in Fund XII.

Welsh Carson will charge LPs a 1.5 percent management fee on total capital commitments during the fund’s six-year investment period, according to an NEPCmemo in Greenwich’s meeting materials. After six years, the management fee falls to 1 percent of invested capital.

The general partner will commit the lesser of $175 million or 5 percent of total capital commitments.

Welsh Carson held several rolling closes on Fund XII, which allowed the firm to invest from the vehicle throughout the past year. In 2015, Welsh Carson made a strategic investment in network security business Simeio Solutions. The firm completed its acquisition of QuickBase from Intuit earlier this month.

Action Item: To see NEPC’s report on Welsh Carson, visit http://bit.ly/1QYhzgj