Michigan commits heavily to venture capital in Q3

  • Michigan backs Insight Venture Partners for $100 mln
  • Most of Q3 commitments were re-ups
  • Michigan to focus PE commitments on existing managers

State of Michigan Retirement Systems in the third quarter committed heavily to venture capital and technology-related investment funds, putting almost $250 million into four vehicles, an investment disclosure from the retirement system shows.

The largest of the four commitments went to Insight Venture Partners’ 10th flagship fund, which is targeting $5 billion with a hard cap of $5.5 billion, Pennsylvania Public School Employees’ Retirement System documents say. The vehicle had raised $4.6 billion as of mid-November.

Michigan is an existing limited partner in two other Insight Venture funds, state retirement system documents show.

State of Michigan Retirement Systems staff previously indicated it would concentrate new commitments among a smaller group of managers, suggesting its private equity and VC strategy would involve re-ups. Two of the system’s other recent commitments also went to firms with long histories of managing Michigan money.

Flagship Pioneering, formerly Flagship Ventures, received $75 million from Michigan for its $618 million fund for investments in life-science businesses. Michigan chipped in $50 million to Apax Partners’ $1 billion debut fund for technology deals, known as Apax Digital.

The $67.5 billion retirement system’s lone commitment to a new manager went to Science Inc, which was targeting $60 million for its second fund. Michigan committed $20 million to the vehicle.

Over the next year, Michigan will continue to direct capital commitments to existing managers in its portfolio, a December strategy memo says. The PE division is directing most of those commitments to mid-market strategies, as well as new co-investment opportunities.

Michigan held 15.7 percent of its assets in PE, which includes its VC holdings, as of Sept. 30. The portfolio has generated a 10 percent return over the previous 10 years, net of fees.

Action Item: State of Michigan Retirement Systems: http://bit.ly/2oX84Ye