Firms & Funds

Washington re-ups $700 mln to Fisher Lynch for co-investments

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Washington State Investment Board, private equity, pension fund, Wellspring Capital Management, New Mountain Partners
The Space Needle is seen as snow flurry clouds surround downtown Seattle January 17, 2012. Residents of the Puget Sound region are bracing themselves for a major snowstorm overnight that is expected to deliver the highest snowfall in 25 years. Photo courtesy of REUTERS/Anthony Bolante - RTR2WFPP
  • Washington also backs Permira, FountainVest
  • Pension forms separate account with Alinda
  • Washington’s PE portfolio netting 10-year annualize return of 9.61 pct

Washington State Investment Board committed $1.3 billion to private equity at its June 16 meeting.

Washington made the commitments across three re-ups with existing managers and one first-time investment. The re-ups included funds managed by Fisher Lynch Capital, FountainVest Partners and Permira.

All the commitments remain subject to continuing due diligence and negotiations, the investment board’s spokesman, Chris Phillips, said in an email.

The largest commitment went to a co-investment fund managed by Fisher Lynch. The $103.4 billion retirement system committed as much as $700 million to Fisher Lynch Co‐Investment Partnership III. Phillips said the fund will target leveraged-buyout and growth-equity investments of $20 million to $75 million.

The commitment marks Washington’s third and largest allocation with the firm.

A $500 million commitment to Fisher Lynch Co-Investment Partnership II, made in 2011, netted Washington an internal rate of return of 17.17 percent and 1.5x total value multiple through Dec. 31, investment board documents showed. A $250 million commitment to a 2006 vintage co-investment fund netted 6.8 percent and 1.4x as of the same date.

Washington also re-upped to Permira for as much as 320 million euros ($359 million). The firm will use Permira VI for mid- and large-cap European buyouts, aiming for exposure to consumer, industrials, financial services, healthcare, telecom, media and technology. Permira set a target of 6.5 billion euros with a 7.25 billion euro hard cap.

Washington’s $135.9 million commitment to Permira Europe IV made in 2006 netted a 7.97 percent IRR and a 1.5x value multiple as of the same date.

Washington also committed $377.1 million to Permira V in 2014. Fund V netted the investment board a negative 4.26 percent IRR and a 1x total value multiple, though the fund likely is still in its J-Curve.

The retirement system’s final re-up was a $200 million commitment to FountainVest China Capital Partners Fund III. The new fund will stick with the strategy of its prior funds and seek out high-growth macro trends in China, Phillips said.

The board committed to two previous funds managed by FountainVest, including $50 million in FountainVest China Growth Capital Fund in 2008, which netted an IRR of 14.4 percent and a 1.6x value multiple. A $150 million commitment to Fund II five years later netted the board an IRR of 48.47 percent and a 1.8x value multiple.

In addition to its PE commitments, Washington also re-upped $400 million across a pair of infrastructure funds managed by Alinda Capital Partners.

Washington allocated as much as $100 million in Alinda Infrastructure Fund III and $300 million in a separately managed account for investments in lower‐risk, asset‐heavy businesses that are smaller than Alinda III investments, Phillips said.

Washington valued its PE portfolio at $17.5 billion through March 31, pension documents showed. The portfolio netted the retirement system a 10-year annualized return of 9.61 percent as of the same date.