Home > News > Risk > MainePERS CIO Deliberates Withdrawal of PE Commitments
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MainePERS CIO Deliberates Withdrawal of PE Commitments

Effort seeks to ‘rebalance’ portfolio.

By Elijah Owens

The board of the Maine Public Employees Retirement System (MainePERS) recently approved a motion shepherded by Chief Investment Officer Andrew Sawyer to withdraw several of its commitments to private equity managers investing in infrastructure assets.

The decision was to redeem approximately five to six commitments to private infrastructure managers out of the approximately 13 relationships the pension plan has in the asset class, in an effort to “rebalanace” the portfolio. The remaining managers would be of the “highest conviction,” according to a memo prepared by the $14.1 billion retirement system

The selection of which managers to terminate relationships with is an “ongoing process,” Sawyer told CIO. He declined to comment further on the deliberation.

Sawyer and his staff recently approved a $150 million commitment to Global Infrastructure Partners IV, a $20 billion fundraising effort which likely will exclude the high-profile infrastructure manager from possible commitment redemption.

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MainePERS’s infrastructure and energy portfolio is inclusive of the following, as of June 30, 2018.

Fund Name

Commitment

Total Distributions

Interim Net IRR

Alinda Infrastructure Fund II

$50m

$52.352m

4.25%

Brookfield Infrastructure Fund II

$100m

$32.947m

9.8%

Brookfield Infrastructure Fund III

$100M

10.781m

n/a

Carlyle Infrastructure Partners

$50m

$61.900m

2.7%

Cube Infrastructure

$44.845m

$23.239

7.5%

EQT Infrastructure III

$68.382

$3.270m

n/a

Global Infrastructure Partners

$75m

$145.478m

17.0%

Global Infrastructure Partners II

$75m

$89.109m

21.3%

Global Infrastructure Partners III

$150m

$6.108m

4.0%

First Reserve Energy Infrastructure Fund

$50m

$39.513m

3.5%

First Reserve Energy Infrastructure Fund II

$100m

$60.870m

43.99%

IFM Global Infrastructure Fund

$100m

$16.652

10.8%

KKR Infrastructure Fund

$75m

$55.854m

10.1%

KKR Global Infrastructure Investors II

$150m

$19.264m

10.5%

KKR Global Infrastructure Investors III

$100m

–

–

Meridiam Infrastructure

$11.211m

$3.878m

9.0%

The memo did not disclose specific timing, manager selection, or other details. Penalties are traditionally imposed on investors who withdraw capital before the end of a private equity fund’s lifecycle, an effective deterrent for behavior that in aggregate could significantly impair a fund.

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Home > News > Risk > Private Equity Boosts Wellcome’s 2018 Returns
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Private Equity Boosts Wellcome’s 2018 Returns

The star asset class’ 20.2% gains raises Trust’s value to $38.4 billion.

By Chris Butera

Wellcome Trust, the UK’s largest charitable foundation, posted a 13.4% return on its investments for 2018, growing its assets to $38.4 billion.

Although this year’s 11.6% asset rewards were not as high as 2017’s 16.9% return, falling short due to sagging European and emerging market equities, the bioresearch charity’s top-performing asset was private equity, which raked in 20.2% gains. The PE harvest, which included standouts of 50.1% returns from private co-investments and 32% returns from venture capital funds, helped bring its five- and 10-year results to 14% and 11.7%, respectively.

Despite these returns, the firm warned in its annual report that the private equity party might not last as the space’s long-term performance has “attracted significant flows of new capital into the asset class, with the result that there is now an unprecedented amount of uncalled funds in the industry waiting to be deployed. ” This means competition for deals has risen, making entry prices more costly.

“Expectations for future returns are therefore more muted than those we have been enjoying in recent years,” the report said.

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As for other assets, hedge funds returned 10.5%, public equities gained 9.9%, and real estate (a combination of property and infrastructure) returned 5.9%. Cash and bond returns were not disclosed.

As of the September-ending period, the foundation’s asset mix was 52% stocks, 24.2% private equity, 9.3% hedge funds, 8.5% real estate, and 4.7% cash and bonds.

With 2018 behind it, Wellcome expects a combination of “slowing, but still positive, growth and higher interest rates” to make the equity and other risk asset “backdrop” more difficult in the near future. Despite continuing volatility, the firm is still “somewhat comfortable” about the environment.

“Our reaction to a more volatile backdrop, especially since the end of the financial year, has been to focus on the cash flow generation potential of the assets we own, and the overall liquidity profile of the portfolio,” the organization’s trustees said in the report, adding that portfolio turnover is still very limited.

“Well-run companies, disciplined investment partnerships, and cash generative assets should do well even in a more unpredictable environment,” said the trustees.

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