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Montana commits $160 mln to PE, names new director

  • Why is this important: Montana doubles down on Deerpath, names new executive director
  • AUM: $11.3 bln; PE allocation 11.1 pct; target range 9-15 pct
  • Pledges to Asia-focused funds, direct-lending strategy
  • Budget chief Villa succeeds Executive Director Ewer
  • Contact for a meeting: Dana Chapman, dchapman@mt.gov

 

Montana Board of Investments at its recent meeting reviewed four private equity commitments totaling $160 million and named a new executive director.

The board, which manages $11.3 billion in retirement-system assets, made four new commitments in the recent quarter, spokeswoman Dana Chapman confirmed.

It allocated $40 million to Blue Sage Capital III fund, $40 million to Axiom Asia Private Capital V fund, $50 million to Crescent Asia Consumer and Deep Value Fund II, and $30 million to Deerpath Capital Advantage Fund IV.

Blue Sage focuses on middle-market companies in environmental services, niche manufacturing and specialty services. It closed its second fund at $150 million in 2012.

Axiom Asia V is a fund of funds that targets Asian-focused private equity funds diversified across buyout, growth and venture capital. Axiom closed its fourth fund on $1 billion as of January 2017.

Crescent Asia is trying to raise $500 million for its second Consumer and Deep Value Fund, which invests in growth companies in core consumer sectors including food, apparel, health and wellness, travel and tourism, auto and consumer services.

Montana had already allocated $30 million to the same Deerpath fund in April, bringing its total commitment to $60 million.

Deerpath focuses on lower-middle-market, direct lending, senior secured loans and investing in established companies, meeting materials show.

Montana’s investment staff chose Deerpath after a search in 2017 for credit-focused PE funds. The fund is seeking to raise $500 million.

Montana had an allocation of 11.1 percent to PE as of June 30, within its approved range of 9 percent to 15 percent.

The state’s private equity portfolio had a market value of $1.2 billion as of June 30, and is primarily North American-centric and focused on buyouts, although the state has an increasing allocation to direct-lending strategies and Asia, according to meeting materials.

The state investment board also is trying to pursue larger deals, evolving toward a smaller group of managers with bigger commitments, the materials say.

The  investment board chose the state budget director, Dan Villa, to succeed Executive Director David Ewer, who is retiring Oct. 1.

Board member Karl Englund said at an earlier meeting that the board narrowed more than 50 applications to two candidates.

The board voted 5-3 to give the job to Villa, with board members Mark Noennig, Teresa Olcott Cohea and Jon Satre voting against.

Englund said both candidates brought different strengths and both were well qualified for the job.

“We’d be well served with either one,” Englund said.

Action Item: Read the meeting materials for the board’s August meeting here: https://bit.ly/2MCv2iv