Virginia locks in $845 mln worth of commitments to five funds

Virginia committed $125 million to Centerbridge Partners’ third fund on Oct. 22. That fund closed on its $6 billion hard-cap for investments in buyouts and distressed strategies in late October.

The list of recent commitments provided to the investment advisory committee included several funds that Virginia has already disclosed, including a $300 million allocation to Hellman & Friedman Capital Partners VIII, which the $66 billion retirement system secured in early October.

Other commitments included:

• $70 million for Veritas Capital Fund V, a $1.87 billion fund that will invest in middle-market companies that provide products and services to public sector customers. Virginia secured its allocation to Veritas on Aug. 12.
• $150 million for New Mountain Capital’s $4.13 billion fourth fund, a generalist fund that closed in early October. Virginia committed to New Mountain Partners IV on Aug. 19.
• $200 million for The Carlyle Group-backed NGP Energy Capital Management. Carlyle co-CEO David Rubenstein expects NGP Natural Resources XI to close on its $5.3 billion hard-cap, according to a recent earnings call.

Chief Investment Officer Ron Schmitz told Buyouts in September that Virginia Retirement System may pursue separately managed accounts that could invest across several private market strategies.

Schmitz and his investment staff would likely pursue arrangements similar to those at California Public Employees’ Retirement System, the New Jersey Division of Investment and the Teacher Retirement System of Texas. All of those LPs have secured broad private market separate account mandates with alternative asset management firms such as Apollo Global Management, The Blackstone Group and TPG Capital.

“We’ve tended to do smaller bite sizes here,” Schmitz said. “Even though we have a large portfolio, we haven’t pursued that, per se. If you look at the larger firms that have multiple structures, real estate, etc. … it may make sense to look at some open mandate relationships.”

Virginia increased its target private equity allocation from 9 percent to 12 percent in 2013. The $5.1 billion private equity portfolio generated a 10-year return of 14.6 percent as of June 30, according to an investment report on the retirement system’s website.