Minnesota doubles down on Goldman, secondaries with new commitments

  • Minnesota commits up to $775 mln to PE in December
  • New commitments include re-ups with Goldman, Merced
  • $81 bln institution forms new relationships with Dyal, Oak Hill

Minnesota State Board of Investmentcommitted as much as $775 million across six private equity funds at its Dec. 1 board meeting, according to its website.

The commitments include four re-ups with existing general partners and two to new managers. All six remain subject to final negotiations of terms and conditions.

The commitments to new managers were among Minnesota’s largest. Dyal Capital Partners, a Neuberger Berman unit, received as much as $175 million for its third flagship fund. Dyal set a $2.5 billion target to acquire minority stakes in the management companies of private equity and hedge funds.

The investment board also committed as much as $150 million to Oak Hill Capital Partners, which ran a stapled secondary process as it sought $3 billion for its fourth flagship fund, Buyouts reported in June. The commitment is Minnesota’s first with Oak Hill.

Minnesota’s largest re-up, also $150 million, went to Goldman Sachs’s in-house PE unit, West Street Capital Partners. West Street is raising $5 billion to $8 billion for its latest buyout fund, the Wall Street Journal reported earlier this year. The firm will likely hold an interim close before year-end.

Goldman’s previous buyout fund, a $20.3 billion vehicle raised in 2007, was netting a 5.57 percent internal rate of return and 1.53x multiple as of Sept. 30, according to Minnesota documents.

A trio of $100 million re-ups

Minnesota also re-upped $100 million each to Merced Capital’s flagship fund and secondary vehicles managed by Lexington Partners and Goldman.

Merced, known as EBF & Associates until it changed its name in 2014, is raising its fifth flagship fund. The firm invests opportunistically across a variety of asset classes, including private loans, real estate, heavy equipment and insurance products.

How much Merced plans to raise through Fund V is unclear. The firm did not respond to a request for comment.

Minnesota is a limited partner in three previous Merced funds. The firm’s previous flagship vehicle, which closed on $800 million in 2013, netted a 4 percent IRR and 1.08x multiple through Sept. 30, Minnesota documents show. Fund III netted a 6.92 percent IRR and 1.32x multiple as of that date.

Minnesota’s commitment to Lexington went to the firm’s newest middle-market secondaries fund, which is targeting $2 billion. Goldman Sachs’s secondary fund, Vintage VII, had raised roughly $3 billion toward its $5 billion target as of late June, Private Equity International reported.

Minnesota State Board of Investment manages more than $81 billion of assets, including $67.6 billion of retirement funds. Minnesota held roughly 12.9 percent of its retirement funds in alternative assets like PE and real estate as of Sept. 30.

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