Minnesota commits $550 mln to PE in February

  • Minnesota backs Silver Lake, Vestar flagship funds
  • Commits $150 mln to KKR’s latest Asia fund
  • Minnesota PE portfolio returns 1.55x since inception

Minnesota State Board of Investmentbacked four private equity funds for a combined $550 million at its Feb. 23 meeting.

The $59.9 billion retirement system allocated up to $150 million each to three buyout funds — managed by Kohlberg Kravis RobertsSilver Lake and Vestar Capital Partners — and $100 million to Adams Street Partners’ sixth secondaries fund.

All four commitments are current relationships for Minnesota, which valued its PE portfolio at $4.7 billion as of Dec. 31, pension documents say.

Minnesota’s $150 million commitment to KKR went to the firm’s third Asian PE fund, which is targeting $7 billion to invest in food safety and agriculture, healthcare and financial-services companies, Minnesota investment memos show.

The firm’s two previous Asian buyout funds, a $4 billion 2007 vintage fund and a $5.8 billion 2013 vintage fund, were netting internal rates of return of 14 percent and 26 percent as of Sept. 30, 2016, respectively.

Silver Lake set a $12.5 billion target for its latest flagship fund, which is expected to hold a first close next month, Buyouts has reported. The firm’s $10.3 billion 2013 vintage fund was netting a 25 percent IRR and 1.3x multiple through Sept. 30, Minnesota documents say.

Vestar, targeting $1 billion for its latest flagship fund, is netting a 30 percent IRR from its $814 million 2012 vintage fund. As with previous Vestar funds, Vestar Capital Partners VII will acquire mid-market businesses with enterprise values up to $1 billion.

Adams Street set a $1.2 billion target for its new secondaries fund, according to Minnesota documents. The firm’s previous secondaries fund, which raised $1.1 billion in 2012, was netting a 1.8 percent IRR and 1.03x multiple through Sept. 30.

Minnesota’s PE portfolio has returned a 1.55x multiple since inception, its latest investment report says. The portfolio distributed $1.7 billion last year.

Action Item: More about Minnesota’s portfolio: www.mn.gov/sbi/