LPs

New Jersey hopes to exit JLL Partners Fund V by November

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  • NJ pension nears sale of stake in JLL Partners fund
  • Fund has exposure to payday lender, an illegal business in NJ
  • Pension officials won’t sell unless they get the right price

“We’re hopeful that by the time we meet in this room for our next meeting, we will be able to report we’ve come to a conclusion, assuming interested parties can provide us with a price that meets our needs,” said Division of Investment Director Chris McDonough at the September 23 State Investment Council meeting in Trenton.

The State Investment Council’s next meeting is scheduled for November 18.

New Jersey’s $79 billion pension system has been trying to divest from the JLL Partners fund since May, when the investment council became of aware of the fund’s ownership of payday lender ACE Cash Express.

New Jersey law prohibits payday lenders from operating within the state, and ACE Cash Express previously ran afoul of federal regulators for illegal debt collection tactics like harassment and issuing false threats. In 2014, the Consumer Financial Protection Bureau forced ACE to pay $10 million in penalties and refunds.

While a sale is far from final, State Investment Council Chairman Tom Byrne signaled the Division of Investment has found interested buyers and is optimistic it will be able to exit the fund soon.

“I’m highly confident we can get this done, but I don’t want anyone walking out of here with the idea that it’s a done deal,” Byrne said at the meeting.

Beverly Brown Ruggia of New Jersey Citizen Action, who previously spoke out about the investment at New Jersey’s May council meeting, applauded the comments by Byrne and McDonough.

“I’m delighted to hear a divestment from ACE is imminent,” she said.

JLL V has been a relatively strong investment for New Jersey. The fund netted the pension a 1.63x net multiple as of June 30, according to pension documents, outperforming the 1.49x multiple generated by New Jersey’s full portfolio of domestic mid-market buyout funds.

The division’s investment staff does not view the possible sale as an end to its relationship with JLL, as it is still finalizing a $150 million commitment the investment council approved for JLL’s latest fund at its January meeting, McDonough said. The commitment remains subject to final negotiations.

JLL is still marketing Fund VII with a $1.1 billion target, according to SEC filings. The firm raised at least $624 million for the fund as of September 9.

JLL did not respond to a request for comment.