Virginia anticipates modest losses in private equity portfolio

Virginia Retirement System is the latest pension system to show where private equity valuations are headed in a turbulent economy.

Virginia Retirement System believes its private equity portfolio will suffer a loss in the “negative high single digits” in future valuation marks from its GPs.

Public pension systems have started to report their latest private equity valuations, which lag public markets, usually by a quarter or more. Many in the industry are waiting to see whether second quarter marks will reflect the broader turmoil in the economy, which they did not in the first quarter.

Speaking at the VRS Investment Advisory Committee meeting on August 18, VRS chief investment officer Ronald Schmitz did not provide an exact range for the latest valuations, but warned of pain in the months ahead. Buyouts watched a webcast of the meeting.

Schmitz said its private equity benchmark was expected to fall by 15 percent.

“We think our portfolio will be down but not as bad as the benchmark. We see our losses in the negative high single digits,” Schmitz said.

VRS also announced a total of 11 private equity commitments made since April. These include:

• $40 million to Matrix Partners XII
• $200 million to Advent International GPE X
• $200 million to Apax XI
• $200 million to Audax Private Equity Fund VII
• $175 million to Green Equity Investors IX
• $100 million to Thoma Bravo XV
• $150 million to Veritas Capital Fund VIII
• $200 million to Apollo Investment Fund X
• $150 million to HIG Advantage Buyout Fund II
• $100 million to Vista Equity Partners Fund VIII
• €120 million to Bain Capital Europe VI