Michigan’s Q4 commitments dominated by re-ups

  • Michigan now an LP in nine active Warburg funds
  • Shamrock, Riverside Co among Q4 commitments
  • $9.7 bln PE portfolio netting 12.7 pct 10-year return

State of Michigan Retirement Systemscommitted $675 million to private equity in the last three months of 2015, including sizable re-ups to Warburg Pincus and TSG Consumer Partners, according to a quarterly investment report released in March.

Of the new commitments, $500 million went to re-ups with existing managers.

With its $175 million commitment to Warburg Pincus Private Equity XII, Michigan is now an LP in nine separate Warburg Pincus investment funds, according to the report. Warburg Pincus closed its 12th flagship fund on $12 billion in November.

Michigan Retirement Systems also allocated $125 million to TSG7, its fourth fund commitment to the San Francisco-based consumer-products specialist.

TSG held a final close on $2.5 billion in December. The firm split its seventh vintage across two vehicles, TSG7 A and TSG7 B, the latter of which will pursue small-cap deals in the consumer-products sector.

The $60.1 billion retirement system’s remaining fourth-quarter commitments are outlined below:

  • Michigan re-upped $100 million to Dover Street IX, a HarbourVest Partners secondary fund targeting $3.6 billion. The fund held a first close in December, Secondaries Investor reported.
  • The pension backed Harvest Partners VII for $75 million. Harvest Partners set a $1.5 billion target and $2.2 billion hard cap for its new middle-market fund.
  • Michigan committed $50 million to FIMI Opportunity 6, an Israeli buyout/distressed fund that held a final close on $1.1 billion in February.
  • The retirement system re-upped $50 million to Riverside Co’s’ fourth micro-cap fund, which is reportedly targeting $500 million.
  • Shamrock Capital Advisors’ raised $700 million for its fourth growth-capital fund, which includes a $50 million commitment from Michigan.
  • Michigan Retirement Systems also re-upped $50 million to Axiom Asia Private Capital’s fourth fund of funds.

Michigan Retirement Systems valued its private-equity portfolio at $9.7 billion as of Dec. 31, according to the quarterly investment report. The portfolio generated a 10-year annualized return of 12.7 percent as of Dec. 31, surpassing both its benchmark and the median return generated by the retirement system’s peers.

Overall, Michigan Retirement Systems’ investment portfolio generated a 2.8 percent return in 2015, surpassing its benchmark by a little more than half a percentage point, according to the report. Its private-equity holdings, along with international equity and long-term fixed income, were primary drivers of the outperformance.

Action Item: For a copy of Michigan’s quarterly investment report, visit http://1.usa.gov/1UOnIOo