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Connecticut Reconnects With PE Markets

The State of Connecticut Retirement Plans & Trust Funds is back in the private equity markets, after a prolonged period of retreat, scandal and litigation. Although no official announcement has been made, both the general partner and limited partner communities are buzzing over the state’s recent decision to hire David Scopelliti as its head of private equity investing. He fills a position that has sat vacant for more than three years, and already has begun selectively looking at new fund commitment opportunities.

“I know David well and think he is terrific,” says William Dawson, a partner with Wellspring Capital Partners, a New York-based buyout firm that cites Connecticut as a limited partner in its new fund. “He has a private equity and banking background, and is a strong addition to the Connecticut team.”

He also is the first principal investment officer charged with the private equity asset class since Michael McDonald left in early 2000. At the time, new Connecticut Treasurer Denise Nappier had imposed an informal moratorium on new private equity investments, stemming from both her general unease over high-risk investments and some troubling private equity scandals related to former Treasurer – and current prison inmate – Paul J. Silvester.

Since then, the $18.5 billion pension system has made few commitments to either new or follow-on funds from either buyout of venture capital firms. In fact, it garnered its greatest amount of industry press by pressuring private equity firm Crossroads Group to distribute certain funds into Connecticut coffers and by going to court to recoup losses related to investments in New York buyout firm Forstmann Little & Co.

“I’ve been working on private equity in my spare time, but it’s great for us to have a full-time resource,” says Susan Sweeney, who was named chief investment officer of the Connecticut pension system last spring. “It was a very competitive process that started 14 months ago… we got over 1,000 resumes.”

Scopelliti most recently served in senior operating positions at both U.S. Business Exchange and Student Transportation of America, before which he was executive director of leveraged lending with CIBC World Markets and a managing director of merchant banking with ING Barings. He says that he’s excited by the new position, and that he has no concerns over Connecticut’s complex reputation within private equity circles. “I’ve had long, exhaustive conversations about the situation here, and am very comfortable,” he says.

Both Scopelliti and Sweeney say that the pension fund’s 11% allocation to private equity will remain, and that it will continue with its policy of not divulging underlying asset data related to its general partnership investments. The system does, however, release GP performance data – including internal rates of return – during its public meetings.

The state of Connecticut is advised by INVESCO on all private equity matters and historically has invested in such firms as Mohr, Davidow Ventures, New Enterprise Associates, Welsh, Carson, Anderson & Stowe and Lexington Partners.

Email Dan Primack