LPs

Virginia Retirement System commits $423 mln to private equity

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Fly fishermen Mike Gasiecki and guide Dan Soper (L) fish the north fork of the south branch of the Potomac River during a winter blizzard in Hopeville Canyon, West Virginia December 8, 2013. A frigid winter storm that left hundreds of thousands of people without power in the Southeastern United States was pushing up the East Coast on Sunday, with snow and ice threatening to snarl road travel and force another round of airline cancellations. REUTERS/Gary Cameron (UNITED STATES - Tags: ENVIRONMENT SOCIETY) - RTX16A8P
  • Audax, Harbourvest, Bain, and Abry secured new commitments from Virginia Retirement System
  • The system plans to maintain an aggressive pacing even as deals become more expensive
  • Virginia raised its private equity allocation from 9 pct to 10 pct between March and June

The $78.6 billion Virginia Retirement System committed $423 million to private equity since its last board meeting, investing in middle-market US. buyouts, large European buyouts, a global growth fund and a levered debt fund.

The retirement system’s investment advisory committee met on Aug. 28 and reviewed recent commitments, including those made after the June 7 board meeting, according to spokeswoman Jeanne Chenault.

The pension system committed up to

  • $200 million to Audax Private Equity Fund VI LP, a middle and lower middle market U.S. buyout fund.  The commitment was made on July 31. Audax’s previous Fund V closed on $2.25 billion in November 2015.
  • $100 million to HarbourVest Partners Co-Investment Fund V LP,  a global co-investment fund targeting growth equity as well as the small, mid and large market buyout investments, with a target size of $2.5 billion. The commitment was made on July 31.
  • $93.3 million to Bain Europe V, a large-market European buyout fund focused on carve-outs, cross-border transactions, complicated business structures and transformational investments. The commitment was made June 11.
  • $30 million to Abry Advanced Securities Fund IV, a levered debt fund focused on middle-market media, communications, information and business services industries. The commitment was made on July 30.

The retirement system also reported significant private equity commitments at its June 7 meeting, committing $413 million to three funds in May.  It has committed almost $4.5 billion to private equity over the past two years, setting an aggressive pace that its investment team plans to maintain as prices on new deals crest into expensive territory, according to a program review released in March.

Overall, Virginia has increased its private equity allocation from 9.1 percent of assets in March 2018 to 10 percent of assets, as of June 30.

The Investment Advisory Committee also reviewed other private markets commitments made since the last board meeting, including $300 million in private credit and $252 million in real assets.

The retirement system committed up to

  • $150 million to the OGAM Taiga Special Opportunities Fund, which invests in bank regulatory capital solutions and direct specialty lending.
  • $150 million to TPG TOP IV, which invests in corporate distressed-for-control, asset special situations and corporate dislocations.
  • $52 million to Fortress Japan Opportunity Fund IV, an opportunistic real estate fund focused on Japan.
  • $100 million to Blackrock Global Energy Infrastructure Fund III, a closed-end fund targeting global energy infrastructure.
  • $100 Million to IFM Infrastructure Debt Fund, an open-end fund focused on secured debt in the North American market.

Action Item: Check out Virginia Retirement System’s June 30 performance and asset allocation report here https://bit.ly/2C3ayL4