NYS Common pledges $1.14 bln to 6 funds; tech, co-invests notable

  • AUM: $207.4 bln
  • Target allocation to PE/Growth Opportunities: 10 pct
  • Actual allocation to PE/Growth Opportunities: 7.6 pct
  • PE strategy: System increasing target allocation to 10 pct; doubled co-investments to 22
  • Whom to contact for a meeting: Jennifer Freeman (jfreeman@osc.state.ny.us)
  • Why this is important: NYS Common’s June PE commitments are largest of any month this year, show growing interest in specialized tech funds.

New York State Common Retirement Fund, the third largest pension in the U.S., committed $1.14 billion to private equity funds, with Europe, specialized tech and co-investments featuring prominently.

The $207.4 billion retirement system signed off on six commitments, said Thomas P. DiNapoli, state comptroller, in an overview of the system’s June activity.

New York State Common committed $690 million across Bridgepoint Europe VI, which closed on 5.5 billion euros ($6.3 billion), Towerbrook Investors V, which closed in June on $4.25 billion and CVC Strategic Opportunities Fund II, which has a 4 billion euro goal.

In February, the pension fund reupped $348 million to EQT Fund VIII, which this year closed on 10.75 billion euros for large buyouts in Northern Europe.

On the tech side, the retirement system committed $50 million to Providence Strategic Growth III, which closed in June on $1.3 billion for software and technology-enabled services investments in the lower-middle market.

This builds on the $305 million that New York State Common has pumped into the tech sector in recent months.

The system previously committed to tech funds like Siris Partners IV and Tribeca Growth Fund. In addition, NYS Common committed $55 million to a suite of other funds, close to a fifth of the committed capital, through the Hamilton Lane/NYSCRF Israel Fund. This co-investment pool makes venture-technology investments in Israel.

Co-investments have been a big growth area in NYS Common’s strategy, with the number of deals doubling to 22 in fiscal 2017, ended March 31, from 11 the year earlier.

The pension fund has also made larger co-investments, such as the $200 million reup toward Co-Investment Fund III with Blackstone GSO Capital Solutions Fund III. GSO is a sector-agnostic fund with a focus on upper-middle-market companies in the U.S. and Europe.

The rest of the pension fund’s June PE commitments were divided among two funds, Providence Equity Partners VIII, targeting $5 billion with a $6 billion cap, and GenNx Capital Partners III.

The retirement system committed $250 million to Providence to target large buyout opportunities in communications, education, and information services. It pledged $150 million to GenNx360 to seek middle-market industrial and business services companies.

NYS Common’s PE program has generated an 11 percent five-year return, or 8.83 percent over a 10-year period.

Action Item: Read more about NY Common here: https://www.osc.state.ny.us/pension/