New Jersey bets on TPG, Stonepeak, Chatham for $525 mln

  • New Jersey backs two TPG Growth funds
  • Management-fee discount on Stonepeak commitment
  • PE program delivering a 1.48x multiple

New Jersey Division of Investment will move forward with four private-market commitments totaling $525 million after the state’s investment council offered no objections at its Oct. 4 meeting, according to spokesman Willem Rijksen. The commitments remain subject to final negotiation of terms and conditions.

The investment division, which oversees the state’s $75 billion public-pension system, will move forward with $200 million of commitments to a pair of funds managed by TPG’s growth platform.

New Jersey will commit as much as $125 million to TPG Growth IV, which is targeting $3 billion with a $3.5 billion hard cap, and up to $75 million to Rise Fund, the firm’s debut social-impact vehicle, which has raised $2 billion.

New Jersey is a longtime investor with TPG Growth, having committed $350 million to the platform since 2007. TPG Growth II, a $2 billion 2011 vintage, was marked as netting a 25 percent IRR and 2x multiple, New Jersey documents show. Fund III, which raised $3.1 billion in 2015, “is still early in its life but is showing promising results,” New Jersey reported.

The pension also committed up to $200 million to Chatham Asset Management’s new distressed private equity fund, targeting up to $1 billion. New Jersey’s separate account with Chatham, a long-short hedge fund, was netting a 14.94 percent annualized return since its inception.

Finally, New Jersey formalized its first-ever commitment to Stonepeak Infrastructure Partners, whose third flagship fund is raising up to $7 billion for infrastructure investments in the U.S. and Canada.

New Jersey’s consultant, TorreyCove Capital Partners, secured its clients a discount on Stonepeak’s management fee. The firm will charge TorreyCove LPs a 1.375 percent annual management fee on committed capital, compared with the 1.5 percent it’s charging other fund investors, according to a New Jersey memo.

First-close investors also receive a larger share of the fund’s profits. For those LPs in the first close, Stonepeak will collect 15 percent carried interest, compared with 20 percent for other investors.

New Jersey’s PE and venture capital platform was valued at a little more than $7 billion as of the end of August. The portfolio has delivered a 1.48x multiple since inception.

Action Item: New Jersey’s investment program: