Wisconsin targets $1.5 bln for PE for year

  • SWIB sets $1.5 bln target for the year
  • Wisconsin to co-invest up to $150 mln this year
  • Re-ups, small and mid-market GPs to dominate fund commitments

The State of Wisconsin Investment Board(SWIB) plans to commit around $1.5 billion to private equity this year, according to an investment plan included in its April meeting materials.

In the first quarter, the investment board allocated $483 million across seven funds and a co-investment. It plans to commit another $1 billion by year-end.

Q1 commitments included a $110 million allocation to Advent International’s Advent International GPE VIII, which closed on $13 billion in March, and $100 million for Leonard Green & Partners’ seventh fund (see SWIB Q1 Commitments).

Wisconsin set a similar commitment pace last year and ultimately exceeded the target by around 20 percent, according to SWIB documents. SWIB committed $1.8 billion to private equity in 2015, including $50 million for co-investments.

The 2016 investment plan would double or triple 2015’s total co-investment activity. Wisconsin expects to allocate between $100 million and $150 million across as many as eight co-investments this year, according to the investment plan.

SWIB launched its co-investment program in 2014 and has evaluated 113 deals from 69 GPs to-date. The $130 million co-investment portfolio includes stakes in 11 companies, netting a 14.7 percent internal rate of return through December 31.

In addition to co-investments, SWIB expects to commit between $1.35 billion and $1.4 billion across 15 to 20 funds, according to the plan. The bulk of Wisconsin’s fund commitments — approximately 85 percent — will go to re-ups with existing managers. It will selectively form new relationships with small and middle-market managers as well.

Much as it did with last year’s investment plan, SWIB expects to “discontinue a number of its existing relationships” with certain general partners in 2016, likely by declining to re-up. While Wisconsin sold segments of its portfolio on the secondary market in previous years, it has no plans to sell fund stakes in 2016, according to the plan.

Wisconsin launched its private equity program in 1985. As of December 31, the $5.4 billion portfolio netted a 13.2 percent IRR since inception.

An $890 million allocation to mid-market buyout funds netted 21.9 percent, which led performance for the portfolio. Large buyout funds also performed well, netting 18.3 percent, while commitments to mega-funds generated 9.6 percent net of fees since inception.

The State of Wisconsin Investment Board manages $97.7 billion of assets, including approximately $88 billion of retirement assets.

Action Item: To see Wisconsin’s 2016 investment plan, visit http://bit.ly/1WqhGmf