Maryland Eyes Mezz, Secondary Funds For Pledges

The $26 billion Maryland State Retirement and Pension System is one of the few pension funds still actively making private equity commitments this year, and it is considering making pledges to vehicles that concentrate on mezzanine debt, secondaries and perhaps distressed investments.

Through the rest of 2009, Robert Burd, managing director of the pension fund, told Buyouts that Maryland could put around $200 million into funds that invest in those strategies.

So far this year, the limited partner has made $485 million worth of pledges, according to Burd. Mega-buyout firm The Blackstone Group got a slug of $100 million for its sixth fund; buyout shops Yucaipa Companies and TA Associates each received $50 million commitments for their latest vehicles; and ABS Capital Partners obtained a pledge of $25 million.

The LP has also shown an interest in putting money to work overseas. It committed $50 million each to Kohlberg Kravis Roberts & Co.’s latest European fund and to the third fund of Navis Capital Partners, a Malaysia-based buyout firm.

Other pledges in 2009 have included $25 million to TA Associates’s TA Subordinated Debt Fund III LP, which will provide subordinated loans to mid-market growth companies; $35 million to Falcon Investment Advisors’ Falcon Strategic Partners III LP, a pool making mezzanine investments in the lower mid-market; and $100 million to Lexington Partners‘s seventh secondary fund.

Last year, the state raised its target allocation to private equity to 15 percent from 5 percent. As of June 30, the actual allocation stood at 3.4 percent. In December, Dean Kenderdine, executive director of the pension fund, told Buyouts that there was no set pace for reaching the target allocation, and that the process could take “a number of years.”