The market couldn’t get more crowded with limited partners if PPMs came with free beer. A recent survey confirms that more limited partners want to join the fray of investing in private equity while many others want to increase their allocations.
A survey, published by JPMorgan last week, shows that both public and private pensions have portfolio allocations in alternative investments that average 10%, according to the JPMorgan Asset Management New Sources of Return Survey. The survey examined the investment practices of 120 large public and private pension plans.
The survey shows that 81 out of 120 plan sponsors, or 68% of respondents, plan on making changes to their allocations to enhance returns. Of those, 75% said they would turn to private equity.
Indeed, New York City’s Comptroller William Thompson has said he would like to increase New York City’s exposure to private equity through its various public pensions.
A spokesperson for his office told PE Week that the Big Apple’s pension systems are “exactly on target” to meet their goal of having $1.2 billion in private equity by the end of the year. New York City’s pensions have so far invested approximately $600 million in the asset class. The city most recently invested in a fund managed by Aurora Capital.
LP enthusiasm for private equity is not limited to the United States. Earlier this month, the French Pension Reserve Fund, a new entrant from Europe, announced it would enter private equity. The public pension system, which has about $24 billion under management, said it named London-based strategic advisory firm Campbell Lutyens as its financial consultant for the private equity program.
Plus, the staff of the California State Teachers’ Retirement System recommended a series of policy changes to help the pension system reach its target alternative asset allocation of 8%. Achieving the 8% allocation would increase its alternative investment holdings to $10 billion.
In March, Mississippi’s governor signed into law a bill that allows the $16 billion Public Employees Retirement System of Mississippi to invest in alternative assets. New Mexico’s governor signed a law in April that allows the $6.7 billion New Mexico Educational Retirement Board, the $10 billion Public Employees Retirement Association and $12 billion State Investment Council, to invest in areas of alternative assets previously prohibited them, including private equity.
The New Jersey State Investment Council approved a plan to invest 13% of its $66 billion in assets into alternative investments. The plan would allocate 5%, or about $3.3 billion, of its assets to go to private equity.