Firms & Funds

Nebraska council: `19 commitments mainly re-ups; will maintain PE pacing

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Nebraska Investment Council, private equity, pension fund
Prof. Stephen Baenziger holds a stalk of wheat at the greenhouse of the wheat-breeding program at the Nebraska university in Lincoln on May 5, 2008. Reuters/Carlos Barria
  • AUM: $27 bln
  • PE portfolio: $767 mln
  • PE target: 5 pct
  • PE allocation: 5.3 pct
  • Whom to contact: Michael Walden-Newman, CIO (nic.info@nebraska.gov)
  • Why this is important: LP focuses on re-ups to maintain pacing

Nebraska Investment Council aims for re-ups to potential buyout funds from Leonard Green and Wynnchurch Capital, and a special-situations fund from HarbourVest’s Dover Street, to maintain its $150 million pacing target for 2019.

It also hopes to add another manager to its venture capital portfolio, a Feb. 14 presentation by Aon shows.

The PE-pacing plan could change based on the best available investment opportunities, the presentation said.

Last year, the council re-upped $50 million each to Bridgepoint’s sixth fund, Jordan Co’s fourth Resolute fund and Genstar Capital’s 10th fund.

The council manages $27 billion across 32 investment programs. Of these, only defined benefit and cash benefit balance and the endowments programs have PE portfolios with a target allocation of 5 percent.

Nebraska’s defined benefit plan’s PE portfolio was invested across 29 buyout funds, three venture funds, 13 special-situations funds and two fund-of-funds strategies. Buyouts, which accounted for more than 55 percent of the PE portfolio, produced an internal rate of return of 14.48 percent as of Sept. 30, 2018.

VC produced an IRR of 12.44 percent, special situations 10.14 percent and funds of funds 7.91 percent for the same period as the defined benefit plan.

Nebraska’s endowments portfolio consisted of five funds of funds that accounted for almost 88 percent of the total portfolio and produced an IRR of 14.01 percent. Its special-situations portfolio produced an IRR of 21.94 percent as of Sept. 30, 2018.

The council postponed its PE investing for the endowment plan in 2018 and will commit $16 million in 2019. Thereafter, the council will invest a similar amount every other year in the endowments portfolio.

Overall, Nebraska’s total PE portfolio produced an IRR of 11.88 percent as of Sept. 30, 2018.

Nebraska’s PE portfolio was largely U.S.-based (82.5 percent) followed by Western Europe (8.7 percent) and Eastern Europe, Mideast and Africa (3.5 percent).

Action Item: Read more on Nebraska’s investments here: https://bit.ly/2GMyp2z