Distributions surge as Wisconsin commits $285 mln

  • Distributions outpace capital calls by $414 mln
  • Arbor picks up $100 mln from Wisconsin
  • Kohlberg, Fountainvest among other commitments

State of Wisconsin Investment Board committed $285 million to private equity in the third quarter, including $100 million to new funds being marketed by Arbor Investments, according to an investment report the retirement system released.

Wisconsin committed $60 million to Arbor Investments IV, which closed on $765 million, and $40 million to Arbor Debt Opportunities Fund I, according to an investment report. Arbor, whose investment strategy specializes in food-and- beverage-related portfolio companies, closed its debut debt fund on $125 million in July.

The retirement system also committed:

  • $52 million to Livingbridge 6, a 660 million pound ($782 million) growth equity and buyout fund focused on investments in the U.K.
  • $50 million to FountainVest’s third flagship fund, which closed on $2.1 billion in September for investments in Chinese opportunities.
  • $50 million to Kohlberg Investors VII. Kohlberg & Co closed its seventh flagship fund on $2.2 billion in December.
  • $33 million to Montefiore Investment IV, a 420 million euro ($438.6 million) French buyout fund.

“SWIB has committed to a number of existing high performing GPs back in the market with well-positioned credit funds (mezzanine and distressed debt),” a market update prepared by the investment board’s staff says. Wisconsin remains concentrated on co-investments, as well as elevating its exposure to small and mid-market funds, staff added.

Wisconsin’s emphasis on small and mid-market funds is timely. The average purchase-price multiple for companies with $50 million of EBITDA or more topped out at 10.7x in the first three quarters of the year, according to SWIB documents. Those prices exceed 2008-era multiples by 1.2x, or 12.6 percent.

For sub-$50 million EBITDA businesses, which is how Wisconsin defines mid-market, multiples held at 9.9x in Q1-Q3.

Through Q3, SWIB’s investment portfolio benefited from the higher purchase-price multiples, the investment report says. The portfolio was exceeding its year-to-date benchmark by 3.4 percentage points through Oct. 31. GPs distributed $1.38 billion to Wisconsin through the first three quarters, exceeding capital calls for new investments by $414 million.

Wisconsin valued its total portfolio at $104 billion as of Oct. 31, with retirement assets accounting for more than $95 billion of its assets. The retirement fund valued its PE and debt portfolio at $7.5 billion as of that date.

Action Item: For more information about SWIB, visit www.swib.state.wi.us/