Iowa Pension OK’s $100M PE Commitment

  • Pension fire and police fund keeps private equity allocation at 19 percent
  • Iowa official sees decision on individual fund commitments later this year
  • $2 billion pension holds Siguler Guff, Adams St., HarbourVest funds of funds

The $2 billion Iowa fire and police pension system’s board of trustees approved the pledge at its July 11 meeting in order to keep its private equity investment amount near its 19 percent target, said Terry Slattery, executive director of the West Des Moines, Iowa-based retirement manager.

The fund’s private equity consultant, Summit Strategies of St. Louis, will provide the pension fund’s board of trustees with recommendations on which funds to select. “We will be making fund-of-fund investments as the system does not have adequate staffing to select funds directly nor be able to monitor the number of funds required if we selected them directly,” Slattery said in an email to Buyouts.

The board already approved a $40 million commitment to the Siguler Guff Small Buyout Opportunities Fund II as a follow-on investment to a $25 million pledge in 2011 to the managed account run by Siguler Guff & Company LP.

The pension system reported $616 million in private equity commitments as of March 31. Among its investments, the fund has committed $185 million for Siguler Guff Hawkeye Opportunities Fund, a 2011 vintage fund of funds tailored for the Iowa pension system. It turned in an IRR of 0.86 percent as of March 31, with limited interests in Siguler Guff Distressed Opportunities IV, Siguler Guff Distressed Real Estate Opportunities, Siguler Guff Small Buyout Opportunities II and Siguler Guff BRIC Opportunities III.

The pension system also commitment $83 million to HarbourVest VII, a 2003 vintage buyout fund of funds with an IRR of 8.1 percent as of March 31. That fund is managed by HarbourVest Partners.

The retirement system’s $77.3 million commitment to the 2003 vintage Adams Street 2003 US, a fund of funds of diversified holdings managed by Adams Street Partners, turned in an IRR of 7.2 percent as of March 31.

The pension system’s $55 million commitment to the Siguler Guff DOF III, a 2007 vintage distressed debt vehicle, reported an IRR of 11.6 percent as of March 31. Meanwhile, HarbourVest European VI, a small- to-mid-market buyout fund, posted a negative IRR of 13.4 percent as of March 31.

Among its fund of funds managers, Adams Street turned in a composite IRR of 7.52 percent, HarbourVest earned a composite IRR of 7.27 percent and Siguler Guff earned a composite IRR of 8.94 percent.

Iowa also committed $50 million to Neuberger Berman Crossroads 2010, a 2010 vintage special situations fund managed by Neuberger Berman that earned an IRR of 7.54 percent as of March 31.

Including all of its investments in public equities, real estate, private equity and other categories, the Municipal Fire & Police Retirement System of Iowa reported a 12.9 percent return for the year ended Dec. 31, ahead of its assumed rate of return of 7.5 percent.