Among its suggested provisions, the ILPA suggests all transaction fees should go to the fund, not the management company; changes in tax law that hurt private equity professionals’ pocketbooks should not be passed along to their investors; and joint and several clawbacks should be standard.
“An alignment between the general partners and the supporting institutions that provide them investment capital will help ensure successful returns in the future,” said Joncarlo Mark, chairman of the ILPA.
The question, though, is if any of this matters. The ILPA has a membership of more than 215 institutional LPs that collectively manage about $1 trillion in private equity assets. But the members are not pledging to reject GPs who don’t follow the guidelines. —Alastair Goldfisher
Tennessee takes PE plunge
A little more than a year after receiving state approval to add private equity to its portfolio mix, the
The $26 billion pension fund committed up to $75 million to mega-fund Hellman & Friedman Capital Partners VII, which is targeted to raise $7 billion with a hard cap of $10 billion; up to $50 million to TA XI, which recently closed with $4 billion; and up to $25 million to Khosla Ventures III, which invests in the information technology and cleantech industries.
The state pension fund’s allocation target to private equity is 3%, although technically up to 5% can be invested in the asset class, says Lamar Villere, director of private equity. Tennessee Consolidated will likely achieve its goal in five years, he says.
The investment policy established in June 2008 allows the pension fund to commit to domestic and international venture capital, corporate buyouts, mezzanine, distressed debt, special situations and secondary funds. Buyout funds, most of which will invest in U.S. companies, will account for 50% to 75% of the program; mezzanine and distressed funds will take up 15% to 20% of the private equity portfolio; and venture capital is expected to nab 10% to 15 percent.
Villere says that a few pledges will also go to secondary funds. —Nancy Gordon
MassPRIM spreads the wealth to six firms
Senior Investment Officer Wayne Smith confirmed that the $50.6 billion pension fund pledged $200 million to
MassPRIM’s target allocation to alternative investments is 10%; and the actual allocation now stands at 9.6%, according to Smith. About 80% of the alternative portfolio is dedicated to leveraged buyouts, growth buyouts, industry consolidations, special situations and subordinated debt. Venture capital forms the other 20% of the alternative portfolio.
Hamilton Lane serves as the LP’s alternative investment consulting firm. —Nancy Gordon
Montana doles out $45M
The $6 billion
A pair of pledges went to non-control distressed debt funds. Montana committed $12.5 million to
The state pension fund, which invests state and local government funds, also committed $7.5 million to Opus Capital Venture Partners VI, an early stage venture capital fund, and $15 million to secondary fund-of-funds Portfolio Advisors Secondary Fund I.
Montana has a target allocation to private equity of 12%, with an allocation range of 9% to 15 percent. As of March 31, the limited partner’s actual private equity allocation stood at 13 percent.
Buyout funds comprise roughly one-third of Montana’s private equity portfolio, with the remainder divvied up among the venture capital, secondary, funds of funds, mezzanine, distressed and special situations categories. —Nancy Gordon