European Funds Among Washington State’s Least Drawn

For the last few years now there’s been a lot of talk about how much committed capital buyout firms have at their disposal. The Private Equity Growth Capital Council, for example, puts the number for this so-called global dry powder at $372 billion, excluding leverage.

But what does this mean for individual limited partners? To find out, Buyouts analyzed performance data for buyout funds from a single LP, the Washington State Investment Board, which last month updated its numbers through March 31, 2012. To capture funds that are still very much in the game but in which you would expect a substantial amount to have been invested, we focused on 15 global funds Washington State considers vintages of 2008 and 2009. We excluded funds with a core strategy other than buyouts.

One takeaway: Funds focused on Europe that the pension classifies as “large” or “mega” funds are among the least drawn down in this sample. That’s a testament to the difficulty of executing buyouts there amid the financial turmoil there in recent years.

Indeed, four of the five of the least-invested buyout funds from 2008 and 2009 are focused on European deals. They are led by KKR E2 Investors LP, a 2009 vintage, €400 million ($569 million, when raised in 2009) annex fund that Kohlberg Kravis Roberts & Co. raised to support investments in its second European fund. (The firm raised €4.5 billion in 2005 for that fund and has drawn down all of Washington State’s commitment.) KKR had drawn down approximately $32.4 million, or 34.45 percent, of Washington State’s $94 million commitment to the annex fund (see table for other funds and more detail).

Meanwhile, KKR’s third European buyout fund, a 2008 vintage fund for which the firm raised $6 billion, was the fourth least-invested, having drawn down about $355.7 million, or 58.7 percent, of Washington State’s commitment of $606 million.