Connecticut mulls commitment to ICG, reviews real estate consultants

  • Assets under management: $32.5 billion
  • PE portfolio: $2.9 billion
  • PE allocation: 8.9 pct
  • Whom to contact: David Barrett []
  • Why this is important: the pension fund has made more than eight new commitments for $520 mln since the beginning of the year, after committing $775 mln to eight funds last year.

Connecticut State Treasurer Denise Nappier is mulling an investment to Intermediate Capital Group’s seventh Europe-focused fund.

In addition, the search for the system’s real estate consultant has narrowed to three contenders.

The $30 billion Connecticut Retirement Plans and Trust Fund’s private equity group is considering a commitment of up to $90 million to ICG’s Europe Fund VII, which is looking to raise 4 billion euros ($4.69 billion).

ICG invests across the capital structure and makes investments in European middle-market companies with enterprise values of 100 million to 1.5 billion euros.

Pennsylvania Public School Employees’ Retirement System also committed 150 million euros to the ICG fund.

This commitment follows two recent commitments to Europe-focused funds by Connecticut’s $2.5 billion PE group. Connecticut committed $95 million to EQT’s eighth fund focused on buyouts in northern Europe. The fund closed at $13.2 billion in February.

At the time, Nappier noted that the investment gave Connecticut an opportunity to diversity geographically via a prominent European PE manager, pension documents said.

Connecticut also committed $94 million to BC Partners’ 10th fund, which focuses on buyout investments in mid-to-large companies in Europe and selectively in North America. The fund closed at 7 billion euros in January.

Los Angeles City Employees’ Retirement System committed $29.7 million to this fund, according to its pension documents.

Connecticut began investing in PE in 1987. It had an allocation of 8.9 percent as of June 30, 2017, pension documents show.

More than two-thirds (69 percent) of the PE portfolio was invested in buyouts/corporate finance, 21 percent in venture capital and 11 percent in cash equivalents and others, pension documents said. The portfolio had 61 active funds as of June 30, 2017.

Connecticut’s PE portfolio has netted a 9 percent IRR since inception.

It returned 13 percent for one year, as of May 31, 2018, and 12 percent for the fiscal year to date, Nappier’s office said.

Meanwhile, the search for a consultant for Connecticut’s $2.18 billion real estate portfolio has narrowed to Callan Associates, Meketa Investment Group and NEPC, pension documents show.

Townsend Group was Connecticut’s real estate consultant, and after its contract expired in February, PE consultant Meketa oversaw the real estate portfolio.

The real estate portfolio had an allocation of 6.89 percent as of June 30, 2017, pension documents show.

It returned 7.39 percent for the fiscal year to date as of May 31, 2018, Nappier’s office said.

Nappier presented both updates at the July 12 Investment Advisory Council meeting.

The council advises Nappier, the trustee of the state’s $30 billion pension system, on policy and investment decisions. Nappier will not be seeking a sixth term as treasurer in 2018.

Action Item: Read more on Connecticut’s performance here