LP Briefs, April 2010

U.S. Venture Drives PIP realizations

Pantheon International Participations PLC is celebrating a rise in distributions of 36% for the half year to Dec. 31, 2009, driven primarily by its U.S. venture portfolio.

Pantheon, a fund of funds listed on the London Stock Exchange, received distributions from its private equity holdings of £32.0 million for the second half of last year. That was an increase from £23.5m received in the six months ended June 30, 2009.

Around £10 million of these distributions came from holdings in primary funds and £22 million from secondary assets. Five of the eight largest fund distributions in the period achieved gross multiples in excess of 4.0 x initial cost.

Venture funds account for 34% of PIP’s total portfolio. In terms of geography, the United States and Europe account for 58% and 31%, respectively, of PIP’s total fund commitments.

Venture funds in PIP’s portfolio include Oak Investment Partners, Summit Partners and Technology Crossover Ventures in the United States and Pacven Walden Ventures in Asia.

“The stock market rally in the period has undoubtedly helped to restore PIP’s performance, firstly by providing a more positive valuation environment but also by supporting more favourable pricing levels for the exits that were achieved in the period,” Andrew Lebus, managing partner at Pantheon, PIP’s manager, said in a statement. —Angela Sormani

PSP Will Continue to Commit to Venture

Canadian pension fund manager Public Sector Pension Investment Board (PSP) will continue to commit to venture funds in spite of the recent news that it plans to increase its focus on direct investments.

So said Jim Pittman, vice president of private equity for PSP, at the SuperReturn conference in Berlin.

Pittman also voiced his disappointment with mega buyout funds. He said PSP may reduce its existing number of GP buyout relationships by half and instead focus on leading direct investments or co-investments with a select number of high quality GPs over the next three years.

PSP started its private equity allocation programme in 2005 with an 8% allocation. That allocation stood at 12% as of March 2009, at the top of its target (between 10% and 12% of total assets).

The main focus of the fund manager in the past has been on global buyout funds with the intention to pursue co-investments. The pension fund does not disclose how much it allocates to LBO funds vs. venture funds, but Pittman says venture fund commitments are never above 10% of total private equity allocation.

Most of the fund’s commitments (46%) are in U.S. funds, while 28% are in European funds, 14% are in Canadian funds, and the remainder are in Asian funds. PIP does not disclose the names of its GPs.

The pension fund is currently committed to 25 general partner relationships worldwide. Of those funds, Pittman says 18 are traditional buyout funds—and all, except for two, have provided lacklustre returns. The pension fund is committed to seven first-time or spin-out funds. Pittman says some of these are top decile and it is the spin-out funds and co-investments that have provided the fund manager with the top returns to date. —Angela Sormani

AlpInvest Slows VC Commitments

Global private equity fund manager AlpInvest Partners has slowed its commitments to venture capital in tandem with a slow down in VC fund-raising. The investor expects to allocate between 5% and 10% of its capital to venture capital funds worldwide.

“Of course with [venture] fund-raising as slow as it is today in absolute numbers we are investing smaller amounts,” says Managing partner Wim Borgdorff. “We are concentrating our capital with a more limited number of better performing GPs.”

Borgdorff was unable to disclose further details with regards to geographical spread of its venture commitments, but the list below suggests the firm has global exposure with a main focus on the United States and Europe. Some of the venture funds AlpInvest is currently committed to include Abingworth Ventures (Europe) BlueRun Ventures (U.S.), Boulder Ventures (U.S.), Eden Ventures (Europe), Granite Global Ventures (U.S./Asia), Pond Ventures (Europe/U.S./Asia), Star Ventures (Israel/Europe/U.S.), TVM (Europe/U.S.) and Wellington Partners (Europe).

AlpInvest manages private equity investments for the asset managers of two large Dutch pension funds: APG, which manages pension assets of approximately €205 billion, and PGGM Investments, which manages assets over €83 billion. —Angela Sormani

BIP Investment Partners to Focus on Directs

Luxembourg-based BIP Investment Partners will no longer make any new private equity fund commitments. The listed fund-of-funds will instead focus on building its direct private equity and public equity portfolio. It will gradually limit its commitment to the funds already in its portfolio and will continue to receive repayments from these funds.

The current BIP fund portfolio has a strong exposure to European venture funds, but is also committed to global, U.S. and European primary and secondary private equity funds (including both venture and buyouts).

Most recently, in line with its decision to wind down its private equity fund investment business, BIP sold its stakes in two Carlyle Group funds: Carlyle European Technology Partners I and Carlyle European Technology Partners II. It received a cash payment of almost €4 million and eliminated €6 million worth of future commitments.

Examples of venture funds in BIP’s portfolio include Carlyle Venture Partners II, Life Sciences Partners III, Lynx Capital Ventures, Mangrove I and Mangrove II, Millennium Material Technologies Fund II and Vertex III.

As of Dec. 31, BIP had total assets under management of €354.7 million, including public equities, direct private equity (including both venture capital and buyouts) and private equity funds. Private equity funds account for 11%, or €38.1 million, of assets.

Neuberger Berman Vehicle to Pull Back from U.S.

Asset manager Neuberger Berman’s European listed vehicle NB Private Equity Partners Ltd. (NBPE) is reassessing the country allocation of its fund commitments and envisages a decrease of its U.S. fund commitments. Over time, the manager expects to build up an increased exposure to Europe and the rest of the world.

Growth and venture capital funds account for around 8% of NBPE’s total private equity commitments and 17% of unfunded commitments. The rest of its commitments break out as follows: large-cap buyout funds (30%), special situations funds (26%), mid-cap buyout funds (21%), mid-cap buyout co-investments (9%), large-cap buyout co-investments ( 3%), secondary purchases (2%), and special situations co-investments (1%).

In terms of geography, North America accounts for 78% of its private equity exposure, including unfunded commitments, Europe accounts for 18% and the rest of the world makes up 4 percent.

NBPE is listed on both Euronext Amsterdam and the specialist fund market of the London Stock Exchange and is managed by the 50-person private equity investment team of NB Alternatives based in Dallas. NB Alternatives, the alternative asset arm of Neuberger Berman, manages over $10 billion of commitments in private equity, including funds-of-funds, secondaries and co-investments. NBPE accounts for around 5% of total assets of NB Alternatives. —Angela Sormani

Swiss FoF Making Commitments Again

Castle Private Equity will start making fund commitments from its Swiss listed fund of funds again in 2010 following a year’s hiatus. The fund also appears to be heading for an additional listing on the London Stock Exchange.

Castle, which is weighted toward U.S. and European buyout funds, stopped making commitments at the end of 2008 to protect its balance sheet and conserve funds amid the global financial downturn. The group stated that it would not be making any new commitments until cash distributions and capital commitments returned to better balance.

The firm is in a good position to start make new investments, with around $90 million remaining from an existing credit facility that was extended by $30 million to a maximum of $150 million in June last year. The expanded facility was put in place in order to facilitate a revival of investment activity. Historically, Castle has an over-commitment strategy to its private equity portfolio and is generally overcommitted between 50% and 80% of its net asset value. At the moment that figure stands at 53% of NAV. —Angela Sormani