Illinois Municipal backs Baring’s seventh fund

  • Assets under management: $42.4 bln
  • Actual allocation to alternatives: 4 pct
  • Target allocation to alternatives: 7 pct
  • Whom to contact: Dhvani Shah, chief investment officer:
  • Why this is important: Asia-focused Baring is an attractive GP for many LPs

Illinois Municipal Retirement Fund at its Dec. 14 meeting re-upped $75 million to Baring Private Equity Asia’s seventh fund, targeting $5.5 billion.

The pension system had committed $75 million to Baring’s sixth fund, which raised $3.9 billion in 2014.

Baring invests in middle and large company buyouts in Asia. Its sixth fund will invest $300 million to $600 million in 15 to 25 companies with enterprise values above $500 million, Rhode Island State Investment Council documents said.

Rhode Island SIC committed $50 million and Texas Employees Retirement System committed $15 million to Baring’s seventh fund.

The management fee for Fund VII was 1.75 percent of capital commitments and 1.5 percent of invested capital, Rhode Island documents said.

The GP commit will be at least 2.5 percent to the seventh fund, documents said.

Several LPs including California Public Employees’ Retirement System, Pennsylvania Public School Employees’ Retirement System, Alaska Permanent Fund, Arizona Public Safety Personnel Retirement System, San Diego County Employees Retirement Association, San Francisco City & County Employees’ Retirement System and Teachers’ Retirement System of the State of Illinois invested in previous Baring funds.

Baring also teamed up with Canada Pension Plan Investment Board to acquire and privatize Nord Anglia Education in 2017.

Baring’s funds invested in business services (49 percent), education (27 percent), industrial (17 percent), consumer (6 percent) and resources and construction (5 percent) companies, documents said.

Control acquisitions were almost half of all Baring investments; venture capital ceased being part of GP strategy since its second fund, documents said.

Almost 39 percent of Baring’s previous four funds were invested in China.

Baring exited two of its Fund VI investments, selling Halla Cement, a Korean cement business, to Asia Cement in January, and Joyful Honda, a Japanese home retailer, in 2017.

In January it sold PSB Academy, a Singapore-based education company to U.K.-based ICG Group.

Baring in 2017 sold its stake in U.K. breakfast-foods company Weetabix to U.S.-based Post Holdings.

Baring’s Fund VI produced a gross internal rate of return of 60 percent, Fund V produced an IRR of 25 percent, Fund IV produced an IRR of 17 percent and Fund III generated an IRR of 91 percent as of March 31, 2018, documents said.

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