New Jersey Division of Investment is launching its first emerging managers focus, with $250 million going into a separately managed account with Barings.
With more than $99 billion in assets under management, New Jersey sees an advantage in growing its access to new managers and smaller funds. The program launches at just the right time as emerging managers and especially first-time fundraisers are having a tough time finding capital in the crowded fundraising market.
“When we look across portfolios, we are trying to find areas where we can expand to add greater value. We can achieve this with an allocation to smaller and emerging managers,” said Shoaib Khan, acting director of the investment division, in a presentation Wednesday.
Through the platform, New Jersey will invest in SMAs that will each have a target of $250 million, which will then be allocated between 10 to 25 underlying private equity funds, according to the presentation.
Khan said small buyout funds have outperformed large buyout funds since 1986, citing data from Cambridge Associates.
The presentation also noted that the platform will help to build the system’s exposure to diverse managers, a characteristic of the emerging manager community.
New Jersey will also attempt to negotiate veto rights on underlying fund investments, the presentation said.
Coinciding with the announcement was the $250 million commitment in the Barings SMA, which will place money in small buyout and growth equity funds located in North America and Western Europe.
The Barings SMA investment team is headed by Mina Nazemi and Rick Spencer.
The management fee for the first three years is 0.40 percent on invested capital.
New Jersey plans on selecting additional SMA investments throughout the rest of the year, according to the presentation.
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