Maryland Below Target, Worried About PE Risk

The Maryland State Retirement Agency only has 3 percent of its portfolio committed to private equity, well below its newly lowered target allocation to the asset class of 10 percent. Even so, the limited partner expects to pledge less aggressively to the asset class due to the slow dealmaking environment.

“We expect to commit less because managers have been slow to put money to work over the last couple of years,” Mansco Perry, CIO, told Buyouts, via a spokesperson. “As a result, we’re more inclined to be very deliberative regarding future commitments. We are extremely concerned about taking on additional risk that was not originally contemplated,” he added.

During its May board meeting, the $33.7 billion pension fund lowered its target allocation for private equity to 10 percent from 12 percent.

In fiscal-year 2009, which began on July 1, the pension fund pledged a total of almost $2 billion to 28 private equity funds. Private equity pledges made in 2009 include ones to ABS Capital Partners; Clayton, Dubilier & Rice; Falcon Investment Advisors; Kohlberg Kravis Roberts & Company; Littlejohn & Company; Peninsula Capital Partners; TA Associates; and Wind Point Partners.

In May, the LP renewed its contract with Altius Associates, its private equity consultant since 2004. Duties will include helping the pension fund develop goals and strategies for the LP’s private equity program; sourcing deals with the pension fund’s staff; performing due diligence; and monitoring the portfolio. The firm will also help staff analyze private market opportunities in credit strategies.