NYS Teachers commits $1 bln in 2019 Q4

Commitments include funds from Cortec, MBK, and Clearlake.

New York State Teachers’ Retirement System committed just over $1 billion to private equity in the fourth quarter of 2019, according to documents posted on its website.

The commitments are:

• $100 million to Cortec Group Fund VII, managed by Cortec Group, which closed in November at $2.1 billion, as Buyouts reported;

• $150 million to HarbourVest/NYSTRS Coinvest Fund III, a separately managed account that will co-invest alongside growth equity sponsors in North America;

• $150 million to MBK Partners Fund V, managed by South Korea-based MBK Partners with a $6 billion target according to Reuters and a $6.5 billion hard cap;

• $150 million to Valor Equity Partners Fund V, a growth fund managed by Valor Equity Partners with a $1.25 billion target, as Buyouts has reported;

• $200 million to Clearlake Capital Partners VI, managed by Clearlake Capital Partners with a $5 billion target and $7 billion hard cap, as Buyouts has reported;

• $200 million to Abbott Select EM Buyouts, managed by Abbott Capital Management, described by NYSTRS as a “private equity fund of one that will target first, second or third institutional managed funds in North American with fund sizes under $1 billion”;

• $75 million to EIV Capital Fund IV, a midstream energy fund managed by EIV Capital with a $750 million target, according to a Form D;

• $30 million to EIV Capital IV Top-Up Fund, also managed by EIV Capital, which will make investments alongside the flagship fund to provide investors additional exposure to “high-conviction” midstream investments.

As of Dec. 31, NYSTRS’ private equity portfolio had $8.8 billion in adjusted market value. The portfolio had 220 active partnerships with 83 managers, $21.6 billion in active commitments and $6.8 billion in unfunded commitments.

As of Sept. 30, the system’s one-year returns were 9.9 percent, slightly above its 9.3 percent benchmark, but longer-term returns were less strong. Three-year returns were 14.7 percent against an 18.4 percent benchmark, five-year returns 13.9 percent against a 15.8 percent benchmark, 10-year returns 14.2 percent against an 18.2 percent benchmark, 15-year returns 14.1 percent versus a 14 percent benchmark and 20-year returns 11 percent against an 11.3 percent benchmark.

Small and medium buyouts made up the largest chunk of NYSTRS’ PE portfolio, with 46 percent. Twenty-three percent was large and mega buyouts, with the rest split between fund of funds, co-investments, secondaries, growth/venture capital and turnaround.

The best-performing private equity asset class was small and medium buyouts with a 16 percent internal rate of return, followed by large and mega buyouts with a 14.3 percent IRR and secondaries with a 12 percent IRR.

As of June 30, 2019, the NYSTRS fund was valued at $122.5 billion.

Action Item: read the materials for NYSTRS’ January 29-30 board meeting here.

Correction: A previous version of this article mis-identified Cortec Group as a Canadian firm. They are based in New York. The article has been updated.