Assets Managed: $80 Billion (Dec. 31, 2011)
Private Equity Assets: $15.2 Billion (Main Trust Fund, Dec. 31, 2011)
Private Equity Allocation: 26% (Main Trust Fund, Dec. 31, 2011)
Private Equity Target Range: 21% to 29% (Main Trust Fund)
Chief Investment Officer: Gary Bruebaker
The Washington State Investment Board, which manages more than $80 billion in pension assets, made more than $1 billion in commitments to a trio of buyout funds, two of which have just begun their fundraising efforts. All three pledges are slated for Washington State’s main pension trust, according to Liz Mendizabal, the board’s public affairs director.
Washington State is known for making large private equity commitments and has one of the nation’s largest programs with $15.2 billion in invested private equity capital as of Dec. 31. Private equity makes up 26 percent of the main trust fund’s overall assets.
Among the new commitments was a $400 million pledge to a new pan-Asian fund from Kohlberg Kravis Roberts & Co. The KKR Asia Fund II LP, which is seeking from $4 billion to $6 billion in commitments, started raising money this quarter.
The fund’s predecessor, the $4 billion KKR Asia Fund, a 2007-vintage fund to which Washington also committed $400 million, so far has generated an IRR of 10.6 percent and delivered a 1.2x return multiple. That fund is currently the largest private equity vehicle devoted to Asian investments. If Fund II were to reach the upper end of its fundraising target, it would likely supplant its predecessor as the world’s largest pan Asia fund.
Early last year, Washington State pledged $500 million to the flagship KKR North American XI Fund LP, which has an $8 billion target. That fund has not yet finished fundraising. Since 1983, Mendizabal said, the board “has committed $7.8 billion across 18 KKR-sponsored investments.”
Washington State also pledged $400 million to Oaktree Capital Management’s newest distressed debt fund, the Oaktree Opportunities Fund IX LP, with a $4 billion target. The newest Oaktree fund, which started fundraising this quarter, aims to take advantage of weakening economies in the U.S. and Europe. In particular, the fund is expected to invest in the massive debt sales being held by European banks, which are being asked to recapitalize their asset bases.
Los Angeles-based Oaktree is the largest private equity investor in distressed debt, overseeing about $80 billion in assets. Last year, the firm filed registration papers for an initial public offering, but the firm has yet to announce a date for its debut as a public company.
Oaktree’s last fund in the series, the 2009-vintage Oaktree Opportunities Fund VIII LP, raised $4.5 billion. While that fund, in which Washington invested $250 million, is relatively early in its investment cycle, it so far has generated a 1.6 percent IRR and a 1x return multiple, according the state’s private equity return data.
Finally, Washington State committed $250 million to the Cinven Group’s Cinven V Fund LP, a fund that has a $6.6 billion target. The London-based buyout firm has emerged as one of Europe’s largest private equity players.
Washington invested $172 million in Cinven’s previous fund, the 2006 vintage Cinven IV Fund LP, which raised $8.5 billion. That fund has so far generated a 6.1 percent IRR and a 1.2x return multiple, according to the state’s private equity return data.