Certain investors in
A Sun Capital spokesman declined to comment.
“It’s really the larger LPs who are having liquidity issues, which is as much of a driver here as anything,” says a longtime Sun investor. “They probably want all of their GPs to cut fund sizes, but you have to pick and choose… and Sun is an easy target right now.”
The Boca Raton, Fla.-based firm has invested just about 26% of fund V, which means there should be available dry powder that can be returned to LPs. The existing fund portfolio includes such investments as Kellwood Co., a Chesterfield, Mo.-based retailer of apparel and other consumer goods, which has pushed its overall value underwater by approximately $500 million.
Meanwhile, the firm has laid off about one-third of its investment staff so far this year, although it does plan to hire new junior staffers soon.
Given this system, one partial solution could be for Sun’s senior managers to alter their management fee structure so that they fund their GP commitment out of their own pockets. However, that’s not likely to be large enough to satisfy liquidity-strapped LPs. —Dan Primack
New York Teachers hot for energy fund
When asked roughly how much the pension fund might commit to private equity during the rest of 2009, spokesperson Heidi Brennan said it would depend on the quality of the available opportunities and how they fit with the pension fund’s strategic plan.
New York State Teachers’ has 58 general partner relationships and more than 100 different funds in its private equity program. The limited partner, which has an appetite for buyout, venture capital, international and special situation funds, has an actual allocation to private equity of 6.7%, with a target of 7% and a range of 4% to 12%, according to Brennan. —Nancy Gordon
LA City hops on H&F bandwagon
The Los Angeles City Employees’ Retirement System recently pledged up to $20 million to Hellman & Friedman Capital Partners VII .
The pool is San Francisco-based Hellman & Friedman’s latest mega-fund effort, targeting $7 billion with a hard cap of $10 billion. The firm’s new war chest will be used to make equity-related investments of $300 million to $1.5 billion, mostly in the United States and Europe.
Fund VII has been a favorite among pension funds, having recently received a $15 million pledge from the San Diego County Employees Retirement Association along with other commitments from Florida State Board of Administration; Kansas Public Employees Retirement System; Los Angeles Fire and Police Pensions; Maine Public Employees Retirement System; Montana Board of Investments; Ohio Public Employees Retirement System; and State of Wisconsin Investment Board.
The Los Angeles city pension fund has supported Hellman & Friedman in the past, with pledges of $11 million and $20 million to funds V and VI, respectively. Fund V, according to performance data from California Public Employees’ Retirement System, had a net IRR of 30.4% as of Dec. 31, 2008.
As of April 2, the LP had an actual allocation to private equity of 10.4%, a target of 8% and a range of 3 percent to 12.5 pecent. —Nancy Gordon