Firms & Funds

Oregon could commit as much as $3.5 bln to PE in 2018

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Oregon Public Employees Retirement Fund, pension fund, private equity
Photo of Oregon CIO John Skjervem at the Buyouts PartnerConnect West Conference, October 2015. Buyouts staff.
  • New pace mirrors 2017 commitments
  • Oregon commits up to 300 mln euros to Bridgepoint
  • $76.8 bln pension to hire two investment officers

Oregon Investment Council will likely commit between $2.5 billion and $3.5 billion to new private equity funds in 2018, mirroring its 2017 commitment pace, according to a presentation made at its Feb. 1 meeting.

The council, which oversees the investments of Oregon’s $76.8 billion retirement system, will likely make 10 to 15 commitments. The retirement system’s allocation will typically be around $250 million or $300 million in size.

Consultant TorreyCove Capital Partners completed a pacing study recommending Oregon maintain a similar pace through 2020. The retirement system held 19.4 percent of its assets in private equity as of Nov. 30, almost 2 percentage points above its target.

Oregon committed a little less than $3.3 billion across 14 funds in 2017. Except for its $480 million allocation to Apollo Global Management’s $24.6 billion flagship fund, each of Oregon’s commitments were $300 million or less.

Like many U.S. public pensions, Oregon spent the past several years committing larger amounts to a smaller number of managers. The retirement system’s long-term plans involve consolidating its private equity program to 40 or 50 fund managers, with each manager handling 2 percent to 8 percent of the program.

At its meeting, Oregon approved a commitment of up to 300 million euros ($372.3 million) to Bridgepoint Europe VI. Bridgepoint is targeting 5 billion euros for investments in European middle-market companies.

Fund VI is expected to hold a final close in Q1, a Hamilton Lane memo prepared for Pennsylvania Public School Employees’ Retirement System shows. The firm’s previous fund, which raised 4 billion euros in 2015, was netting a 27.2 percent internal rate of return and 1.21x multiple as of mid-2017.

In addition to disclosing its projected commitment pacing, Oregon also announced two investment officers would join its PE team in the first quarter. A third investment officer will be recruited over the course of the next year.

Longtime Investment Officer Sam Green left the retirement system last year. Another investment officer, Andy Hayes, left Oregon for a position at placement agency FIRSTavenue in 2016.

Oregon did not identify the newly hired officers. An Oregon spokesman did not respond to requests for comment.

Action Item: To see the Oregon presentation, visit http://bit.ly/2FMNY6A