Michigan backs Apax and Veritas funds during Q3

The system's third-quarter PE commitments lag behind the previous quarter's

State of Michigan Retirement System committed up to $265 million to private equity funds in its third quarter, according to a quarterly investment review document from its December board meeting.

The system invested $150 million to Apax Partners’ tenth fund, targeting $10.5 billion. Apax X focuses on healthcare, consumer and services, global technology and telecommunications in North America, Europe, Asia-Pacific, the Middle East and Latin America, Buyouts reported.

In 2019, Washington State Investment Board committed $350 million to Apax X in June. Other systems, such as Kansas Public Employees Retirement System, Minnesota State Board of investment, Pennsylvania Public School Employees’ Retirement System and Virginia Retirement System, invested a combined $600 million to the fund, according to data from sister publication Private Equity International.

Michigan pledged $100 million to Veritas Capital’s Fund VII during the third quarter. The pool closed in October with $6.5 billion, surpassing its $5 billion target. According to Buyouts, it focused on the technology industry in North America.

Texas County & District Retirement System, Oregon Public Employees’ Retirement System and Virginia Retirement System committed to Veritas’ seventh fund last year.

Michigan also committed $15 million to The Riverside Company’s lower middle-market supplemental fund, Micro-Cap Fund IV B.

The system’s quarter three investments are significantly lower than its second-quarter commitments. The board invested $868 million in private equity during 2019’s second quarter.

Some commitments during that time included: $250 million to Advent International GPE IX, which closed in June at $17.5 billion; $150 million to Dover Street X from HarbourVest Partners, targeting $6.5 billion; and $65.4 million to Permira’s seventh fund that closed in October at $12.13 billion, Buyouts reported.

Michigan made $1.065 billion in investments across all of its asset classes during the third quarter. Two venture funds, Science Venture Fund III and Lightspeed Opportunity Fund, which received $25 million each, fall under the system’s private equity portfolio.

Investments in the information technology sector make up the majority of Michigan’s private equity investments, making up 25.4 percent of the investments, followed by healthcare and industrials, according to the investment review document.

Private equity makes up $13.8 billion, or 18.6 percent, of the system’s $74.8 billion portfolio, surpassing its 18 percent target.

Action Item: Check out Michigan’s quarterly review document here.