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Louisiana Teachers’ backs Apollo natural-resources fund, sets pacing target

  • Assets Under Management: $19.5 bln
  • PE allocation: 11 pct
  • Whom to contact: Lisa Honore at lisa.honore@trsl.org
  • Investment Adviser: Hamilton Lane
  • Why this is important: LP has committed almost a third of its pacing for fiscal 2019

Teachers’ Retirement System of Louisiana re-upped $75 million to Apollo Global Management’s third natural-resources fund, targeting $4 billion, its December meeting documents said.

Apollo’s natural resources program is nested within its private equity strategy and has more than $5 billion in AUM. The funds pursue opportunities on their own and co-invest alongside Apollo’s flagship funds in larger opportunities.

Louisiana Teachers’ made the commitment under its commodities strategy in alternatives. Previously, it committed $75 million to Apollo’s sophomore natural-resources fund in 2015.

The third resources fund will invest in North American energy, metals and mining and agriculture companies with enterprise values of $300 million to $10 billion.

Apollo will invest $50 million to $500 million in 15 to 20 companies and will also use a line of credit, pension documents said.

Like its predecessors, Apollo’s third fund will focus predominantly on energy (60 percent-70 percent) and metals (20 percent to 35 percent). Apollo had also identified a mining opportunity for the third fund, documents said.

Apollo’s natural resources Fund I, which raised $1.32 billion in 2011, made 15 investments and produced a net internal rate of return of 8.1 percent as of June 30, 2018. Nearly four-fifths (79 percent) of the fund was invested in energy and 9 percent in metals and mining.

Resources Fund II, which raised $3.45 billion in 2015, made 13 investments and produced a 23.3 percent IRR as of that date. Four-fifths (81 percent) of the fund was invested in energy and 11 percent in metals and mining.

Greg Beard leads Apollo’s natural resources team along with Apollo Co-Founder Joshua Harris, Co-President Scott Kleinman, Geoffrey Strong, Gareth Turner and Rakesh Wilson.

Pacing target for fiscal 2019

Louisiana Teachers’ committed $585 million of its target commitment pace of up to $1.4 billion for fiscal 2019.

The system set a target range of $150 million to $300 million for three to five buyout commitments for 2019. It committed $50 million each to funds from TPG, Thoma Bravo and Lindsay Goldberg.

Its current allocation to buyouts was 10.7 percent as of Sept. 30, 2018, compared with a target of 11 percent.

Louisiana Teachers’ alternatives strategies include buyouts, venture, real estate, private-market debt, infrastructure, commodities and farmland. The alternatives portfolio had a 31 percent allocation against a 35 percent target.

The $6.57 billion alternatives and real estate portfolio returned 13.12 percent over one year, 12.03 percent over three years, 11.76 percent over five years and 8.76 percent over 10 years as of Oct. 31, 2018.

Action Item: Read more on Apollo here https://bit.ly/2ClwjDY