The firm will serve in a non-discretionary role, tasked with identifying nontraditional private equity sectors where the state is not yet invested but that are positioned well for the next fund cycle. StepStone will likely advise Wisconsin on commitments in $50 million increments.
“We’ll be looking more at smaller size funds, $750 million and under,” said StepStone CEO Monte Brem. Some of the areas Brem has his eye on are specialized distressed debt strategies, international markets, infrastructure and possible hybrid strategies involving private equity firms and hedge funds. “It’s more of a top-down approach,” Brem said. “We do a lot of research on sectors of the market, determine which areas we think are going to be positioned to outperform, and we go and find the best managers in those areas.”
Scott Parish, the State of Wisconsin Investment Board’s private equity portfolio manager, singled out StepStone’s analytical approach to due diligence—the way the firm breaks down in detail how a particular fund has generated its returns—as one of the factors that put StepStone over the top. State of Wisconsin Investment Board signed StepStone quickly, just 45 to 60 days after the deadline for proposals. StepStone also advises the
SWIB is the agency that invests the assets of the $87 billion Wisconsin Retirement System, which provides benefits to roughly 533,000 current and former employees in state agencies, local governments, school districts and the university system. The board also invests on behalf of the Wisconsin State Investment Fund and other Wisconsin Trust Funds. SWIB manages total assets of $93 billion. The state has been investing in private equity since 1985, and has a target allocation of five percent to the asset class.—J.P.