Pioneering LP DuPont Capital halts private equity investing

DuPont Capital Management, which has built up its private equity investing program over the past few years, has halted PE investing and may be exiting the business, sources told Buyouts.

The move is unusual for a limited partner organization at a time when most LPs are either maintaining or growing their exposure to the asset class. Institutions generally exit the asset class because of a change in strategic direction and a move away from illiquidity.

“You don’t hear about that very much,” one source with no connection to DuPont Capital said.

The group’s private markets team, led by Antonis Mistras, managing director of alternative investments, recently rescinded an agreed commitment to a fund after the decision to halt private equity investments, one of the sources said.

It’s not clear exactly why the group is freezing private equity investing. A spokesperson for DuPont Capital declined to comment.

DuPont Capital manages the DuPont Pension Trust as well as third party institutional capital. It had been on a steady pace over the past few years, and in 2019 doubled its activity, Buyouts previously reported. DuPont Capital had $2 billion of assets under management as of the second quarter, the group said in an information presentation on the website.

DuPont Capital was formed in 1993, but DuPont’s private equity investing dates back to 1989, with an unwavering focus on the small and middle market. DuPont Capital raised four fund-of-funds vehicles to manage external capital. It was one of the first corporate pensions to build a private equity program, sources said.

The decision to halt private equity came after a major corporate reorganization. DuPont Capital is an affiliate of Corteva, which was created as part of a three way split in 2019 of DowDuPont. DuPont and Dow Chemical merged in 2017 to create DowDuPont. That combination broke up into Corteva Agriscience, DuPont and Dow.

Corteva is led by Jim Collins, CEO. Corteva reported a drop in net sales to $5.6 billion in the second quarter, from $9.8 billion in the first quarter.

DuPont Capital’s private equity program targeted buyout funds up to $1.25 billion in size, and venture funds under $550 million. The small/middle-market investments made by the Private Markets Group since 2001 generated a net internal rate of return of 15.2 percent, the group said in its information presentation. Since 2011, the generated a net IRR of 22.4 percent.

Exits from the asset class often lead to opportunities for secondaries sales. It’s unclear if that is part of the thinking right now. One of the sources said they don’t believe the company will use the secondaries market to sort out fund stakes.