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Oregon readies $250 mln separate account with General Atlantic

  • Oregon lacked exposure to growth equity
  • General Atlantic offers below-market management fee
  • Account to invest in 40-60 growth-equity deals

The Oregon Investment Council plans to shore up the state retirement system’s lagging exposure to growth equity through a $250 million separate account with General Atlantic.

The council approved the commitment at its September 9 meeting, though it remains subject to negotiations, said spokesman Michael Cox.

Consultant TorreyCove Capital Partners identified growth equity as an area where Oregon’s $69.6 billion retirement fund lacked exposure at the investment council’s February 4 meeting. At the time, just 1.1 percent of the market value of the pension’s private equity portfolio was in growth-equity assets, well short of its 5 to 10 percent target range for the sub-sector.

Given the size of its $14.4 billion private equity portfolio, Oregon has historically found it difficult to access growth-equity strategies. Most funds in the space are relatively small, and Oregon’s commitments to private equity vehicles often exceed $100 million or more, according to pension documents. Without a separate account, Oregon would likely need to make commitments to several new funds to reach its targeted exposure range for growth equity.

“This commitment will allow OIC/OST [the investment council and treasury] to begin a large and scalable relationship with a high-quality growth-equity manager, while only adding one new relationship to manage,” said an Oregon staff memo.

The memo indicates General Atlantic offered Oregon favorable terms on the new account, including a below-market management fee and a 10 percent GP commitment.

General Atlantic will invest Oregon’s $250 million account in 40 to 60 deals, typically taking significant, but non-controlling stakes in growing companies, according to pension documents. The firm invests globally in the business services, financial services, healthcare, Internet/technology and retail/consumer sectors.

General Atlantic does not manage a traditional private equity fund, instead managing large accounts on behalf of clients like the Peter G. Peterson Foundation and Stanford Management Co, according to Oregon documents.

The firm began raising money from U.S. public pensions in recent years, including the Tennessee Consolidated Retirement System. Tennessee claimed to be the first public pension to invest with General Atlantic when it committed $100 million to the firm in early 2013, according to pension documents.

General Atlantic declined to comment.