LP corner, week of Oct. 12, 2009

Grove Street may pledge up to $500M in 2010

Grove Street Advisors may commit between $400 million and $500 million next year to private equity fund managers, although the amount ultimately depends on who is coming back to market, says Catherine Crockett, a general partner with the firm.

Next year’s private equity pledges could handily surpass the amount that Grove Street committed in 2009, which will probably top off somewhere between $270 million and $300 million, Crockett says.

Grove Street invests in Asia, Europe and the United States. It also has a continuing interest in such areas as India and China. In regards to Latin America, Barry Gonder, a Grove Street general partner, notes that he feels uncomfortable with the region due to its “very venture-like” returns.

“We’re thinking about it but are still very cautious,” he says.

Typically the Wellesley, Mass.-based firm commits to buyout and growth equity funds that are as small as $100 million and as large as $4 billion, but its sweet spot is funds of $350 million to $1 billion in size.

Managers that have received pledges recently include early stage venture firm Charles River Ventures; special situations manager KPS Capital Partners; and mid-market buyout shop Wynnchurch Capital.

Grove Street Advisors has also dabbled in secondary investing this year and intends to do more, although the firm does not buy portfolios of secondaries. —Nancy Gordon

Guardian Life reveals PE plans

Guardian Life Insurance Company of America is in the third year of its five-year private equity program, and the limited partner has lots more to spend. The LP’s program calls for it to invest $200 million each year to the asset class.

David Turner, managing director and head of private equity, explained that besides having a target allocation to the asset class, he also has an annual investment budget so he can stay in the market as opportunities arise.

“It’s important to stay in the market regardless of constraints, and a target allocation alone only creates a stranglehold,” he said at a recent industry conference in New York.

Turner, who joined Guardian Life in May 2007, declined to state the firm’s target allocation to private equity.

Past commitments have gone to Evergreen Pacific Partners, a Seattle-based private equity firm focused on the middle market, which closed its second fund last year with $425 million. Pledges also went to mid-market buyout firm Pfingsten Partners and the $225 million debut fund of Foundry Group, an early stage venture firm.

At the conference, Turner jokingly issued a warning to those thinking of getting into the private equity industry: “Stay on good terms with your cardiologist: it’s not for the faint of heart.” —Nancy Gordon

Illinois SURS seeks investment officer

The State Universities Retirement System of Illinois is seeking an investment officer to fill a new position that reports to the deputy chief investment officer.

The state pension fund is looking for candidates with experience in the institutional real estate and/or alternative investments asset classes, especially someone with knowledge of financial and auditing guidelines in the area of alternative investments.

Primary responsibilities include monitoring existing external investment managers in addition to researching and recommending investment managers and programs.

As of August, the limited partner had an actual allocation to private equity of 8% and a target allocation of 6 percent.

Currently, Illinois SURS plans to commit $300 million to private equity each year between 2009 and 2011. —Nancy Gordon