The $155 billion New York State Common Retirement Fund last week announced $145 million in new commitments across three firms, with $100 million going to CVC Equity Partners Asia Pacific III, $35 million to mid-market buyout fund Palladium Equity Partners III and $10 million to Carmel Ventures III.
Since the pension began releasing its commitment plans a few months ago, its capital has largely been flowing into the coffers of mid-market firms, as well as international firms, suggesting an effort to more aggressively diversify in the face of a U.S. credit crisis with no end in sight. (Indeed, the pension holds more than 427,000 shares of the nearly defunct investment bank Bear Stearns through index funds in which it has invested.)
CVC Equity Partners Asia Pacific III is the third pan-Asian fund from the Hong Kong-based affiliate of Luxembourg-based CVC Capital Partners, a global, stage-agnostic buyout shop launched in 1981. CVC Asia Pacific was formed in 1999 and its newest vehicle, which is targeting $4 billion, has already attracted a number of American LPs drawn to its strategy of investing in more developed companies in Japan, Singapore, South Korea, Greater China, and Australia. Last fall, for example, it traded $225 million for a 29 percent stake in Zhuhai Zhongfu Enterprise Co., a plastic bottle company that counts Coca-Cola Co. and PepsiCo. among its customers, and that trades on the Shenzhen Stock Exchange in China. Pennsylvania Public School Employees Retirement System and Citigroup committed $300 million and $500 million to the fund, respectively, soon after it opened last summer.
Palladium Equity Partners III is a middle-market buyout fund focused on Hispanic markets, as well as companies founded by Hispanic entrepreneurs. Its most recent deal was for American Gilsonite Co., a Palo Alto, Calif.-based mining company that it agreed to purchase earlier this month for $74 million. The New York-based firm originally closed its third fund in 2006 with $520 million, but according to the New York State Office of the State Comptroller, which oversees the New York State Common Retirement Fund, the fund re-opened last summer and now has a target of $1 billion. Little wonder, considering its investment pace. Last year, the fund closed eight deals, three of which were Hispanic-owned and five that targeted Hispanic markets. One of those deals, for an undisclosed amount, was for Castro Cheese Company, which makes, distributes, and markets Hispanic cheeses and creams.
Meanwhile, Carmel Ventures III is a $235 million Israeli venture fund whose other backers include California Public Employees’ Retirement System and Goldman Sachs Group. Carmel closed its newest fund this month and has already made one new investment from it, backing customized semiconductor maker DesignArt Networks, based in Ra’anana, Israel.
The pension system made the commitment to Carmel Ventures III through its Hudson River Fund II, an $850 million captive fund of funds managed by adviser Hamilton Lane of Bala Cynwyd, Pa. In February, the pension announced two other investments from Hudson River Fund II, which received a $450 million commitment from the comptroller’s office late last year, following a $300 commitment that it received in 2002. GESD Investors II LP, a San Francisco-based mid-market buyout fund that focuses on consumer, restaurant, entertainment and business sectors, received a $15 million commitment. A second Israeli venture fund, Giza Venture Fund V, managed by Tel Aviv-based Giza Venture Capital also received a $15 million commitment.