KSL takes flight with $100 mln commitment from NJ; JLL gets $200 mln

  • NJ committed to JLL Partners fund two years after selling stake in earlier fund
  • State pension funds are above target allocation to buyouts and venture capital
  • State is bit behind its annual commitment pacing for private markets

New Jersey Division of Investment committed up to $300 million to two private-markets strategies, investing in small and middle-market buyouts as well as travel-and-leisure businesses.

The state, which has $79.43 billion in combined pension assets, also reported that it was somewhat behind its private-markets pacing targets for the year, although a spokesman said that it still has time to meet those goals.

The state’s investment board approved the commitments at an Oct. 25 meeting.

The large commitment went to JLL Partners Fund VIII, which will pursue a small and middle-market buyout strategy with a target fund size of $1.25 billion and a GP commitment of 5 percent.

New Jersey has invested in several previous JLL Partners’ funds and has co-invested alongside JLL in other investments generating attractive returns, pension-fund documents show.

The state was forced to sell its stake in one previous JLL fund, however, due to its ownership of a payday-lending company, which broke New Jersey law.

New Jersey also approved a $100 million commitment to KSL Capital Partners’ fifth fund, which will target equity and debt investments in travel-and-leisure assets and businesses.

KSL Capital Partners V, which has a $3 billion hard cap, will seek value-add opportunities in hospitality, recreation, clubs and travel services. And it will seek to acquire businesses that have been undermanaged and need repositioning or capital improvement, according to pension documents.

The state investment council also discussed its PE and real estate pacing for the year. New Jersey planned to commit $1.5 billion to the two asset classes this year, but committed only half that amount by Sept. 30, according to meeting documents.

Still, the slower pace isn’t enough to cause the investment council to change its pacing target, said spokesman William Skaggs.

“To date, actual net cash flows and new commitments are somewhat below projections, on balance, leaving the DOI positioned to maintain its targeted allocations,” Skaggs said.

“The Division of Investment expects distributions to pick up into the end of the year, with some additional commitments for investments previously presented to the council that should close before year end as well.”

New Jersey is currently above its target allocation for buyouts and venture capital, with an 8.25 percent target and a 9.49 percent allocation. It is below its target for debt-related private equity, with a 2 percent target allocation and a 1.22 percent actual allocation.

Action Item: Read more about the Division of Investments latest meeting here: https://bit.ly/2O7WoJp.