New Jersey Makes Big Commitments to Warburg, TPG

Pension Manager: New Jersey Division of Investment

Assets Managed: $70 Billion (Jan. 31, 2012)

Private Equity Assets: $5 Billion (Jan. 31, 2012)

Private Equity Allocation: 7% (Jan. 31, 2012)

Private Equity Target Allocation: 5.5%

Chief Investment Officer: Timothy Walsh

As it continues to rack up commitments from the nation’s largest pension funds, Warburg Pincus nabbed a $300 million pledge from the New Jersey Division of Investment, the state treasury division that manages the state’s $70 billion pension system. The pension also pledged $100 million to TPG’s TPG Growth Fund II LP.

New Jersey’s large commitment to the flagship Warburg Pincus Private Equity Fund XI LP comes on the heels of the Washington State Investment Board’s giant $750 million pledge to the fund last December.

The Warburg Pincus fund, with a $12 billion target, is currently the largest U.S.-based private equity fund in the market. The previous holder of that distinction was The Blackstone Group’s BCP Fund VI LP, which closed earlier this year after having secured, over a four-year period, more than $16 billion in commitments.

New Jersey has been a standout investor for Warburg Pincus, with commitments now totaling $925 million over four funds. The pension’s previous commitment to Warburg Pincus, a $400 million pledge to Fund X, a 2007 vintage fund, has so far generated a total value multiple of 1x, according to New Jersey data dated Jan. 31, 2012.  Although New Jersey doesn’t offer IRR data, Washington State does, and it reports that Fund X’s IRR was 1 percent as of Sept. 30, 2011.

Warburg Pincus’s two previous funds have fared better too . Fund VIII has an IRR of 16 percent and a 2.1x return multiple, while Fund IX has an IRR of 8 percent and a 1.4x return multiple, according to Sept. 30th data from Washington State.

Like its commitment to Warburg Pincus, New Jersey’s pledge to TPG’s latest mid-market buyout fund adds $100 million to a deep relationship that now accounts for $733 million in total commitments over six funds during the last six years.

New Jersey’s commitment to the TPG fund is the second to the firm’s middle market efforts. The state’s last commitment, also for $100 million, was to the TPG Star Fund, the Growth Fund II’s predecessor.

The TPG Star has so far shown a total value multiple of 1.3x, according to New Jersey data. As it happens, Washington State also invested in TPG Star, and its data, from Sept. 30, 2011, shows an IRR of 13 percent and a 1.2x return multiple.