- $71.6 bln re-ups with CVC flagship, Neuberger Berman co-invest account
- Neuberger netting 44.5 pct IRR on existing co-investments
- EQT, New Jersey staff disagree on legal terms of new infra fund
New Jersey State Investment Councilinstructed the state’s Division of Investment to move forward with a pair of commitments to funds controlled by existing managers in its program.
The Council, which acts as fiduciaries to the state’s $71.6 billion retirement system, on March 29 directed the division to move forward with a 100 million euro ($107.3 million) commitment to CVC Capital Partners VII and $200 million to a co-investment separate account managed by Neuberger Berman.
Both commitments remain subject to final legal negotiations of terms.
The $200 million Neuberger Berman commitment is New Jersey’s third separate account with the asset manager a staff memo shows. The firm has participated in 151 co-investments on behalf of New Jersey to date, grossing a 44.5 percent internal rate of return and 2.5x multiple.
New Jersey noted that it had obtained attractive terms on the new fund. The retirement system will pay a 0.5 percent management fee on invested capital and 0.1 percent on committed capital during the fund’s investment period. Afterward, New Jersey will pay just 0.3 percent on unrealized invested capital.
Neuberger Berman will collect 10 percent carried interest on co-investments that clear an 8 percent return hurdle, and 15 percent on deals that exceed 15 percent. New Jersey also has veto power over the fund’s co-investments, pension documents say.
CVC Capital Partners set a 12.5 billion euro target for its latest buyout fund, which will invest in European and U.S. buyouts, a New Jersey staff memo says. Fund VII will invest 150 million to 750 million euros of equity per deal.
Fund VI, which raised 10.9 billion euros in 2014, was netting a 1.8 percent IRR and 1.02x multiple through Sept. 30. Fund V, a 2008 10.7 billion euro vintage, netted a 17.5 percent IRR and 1.86x multiple as of that date.
Dropping out of EQT
At the meeting, New Jersey also indicated it had pulled out of a $100 million commitment to EQT Infrastructure III approved at the State Investment Council’s November meeting. In a memo included in meeting materials, New Jersey staff wrote that the division and EQT were unable to agree on the terms of legal documents.
EQT saw strong demand for its latest infrastructure fund, which closed in February on 4 billion euros. EQT completed the fund raise in six months, its fastest to date.
Division Director Christopher McDonough said the division may commit to another infra fund in the latter half of 2017.
EQT could not be reached for comment.
Action Item: For more information about New Jersey, visit www.state.nj.us/treasury/doinvest