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New Private Equity Commitments Continue at Washington State Investment Board

Up to $650 million in new commitments are part of a plan to keep up the retirement system’s 20%-plus allocation to private equity.
By Randy Diamond

The Washington State Investment Board (WSIB) has made up to $650 million in commitments to two private equity funds.

WSIB said in a press release that up to $350 million was committed to Apax X, L.P., a global buyout fund with a target size of $10.5 billion.

Washington State investment officials say they have had a 20‐year partnership with the fund’s manager, Apax Partners, investing in five previous funds since 1998.

In addition, up to $300 million was committed to Warburg Pincus China Southeast Asia II, L.P. The fund has a target size of $3.5 billion and is being raised by Warburg Pincus LLC. WSIB has had a 24‐year partnership with Warburg Pincus, investing in 12 previous funds since 1994, pension plan officials say.

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The commitment to both private equity funds was made by WSIB investment staff using delegated authority, the press release noted.

WSIB Trustees did not have to approve the commitments. Both were recommended by WSIB private equity consultant Hamilton Lane. Since late February, WSIB has made more than $3.6 billion in new commitments to private equity.

The commitments are part of a plan to keep up the large percentage of pension plan assets that are devoted to private markets.

It comes as other WSIB funds are being liquidated as their investment cycle wraps up. As of March 31, the latest numbers reported, private equity made up 20.98% of the $104 billion pension fund’s overall assets.

With $21.8 billion invested, WSIB has one of the largest overall investments in private equity among institutional investors in the US.

Its 20.98% allocation is also more than twice as large as those of the two largest US pension plans, the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS).

Building on long-term relationships, WSIB Chief Investment Officer Gary Bruebaker and his private equity investment staff have been able to obtain new commitments in private equity funds on a consistent basis from top performing managers—despite increasing competition from other institutional investors.

CalPERS and CalSTRS officials have tried to increase the size of their private equity programs, but due to the difficulty of getting into all the new PE funds they want, hey have both faced shrinking programs.

When other private market programs are also counted, such as real estate, infrastructure, and tangible assets, WSIB has an approximate 40% allocation to private markets. Such an allocation is unique among public pension plans and is more typically found in the asset allocation of college foundations.

Bruebaker is retiring at the end of this year after 18 years at WSIB. The pension organization is conducting a national search for his replacement.

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Washington State Investment Board Commits $2 Billion to Private Equity

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Home > News > Newsmakers > Pennsylvania SERS Approves $286 Million in New Commitments
Newsmakers

Pennsylvania SERS Approves $286 Million in New Commitments

State retirement system board also confirms James Nolan as acting CIO.

By Michael Katz

The board of the $28.8 billon Pennsylvania State Employees’ Retirement System (Penn SERS) has issued new commitments totaling nearly $286 million, including up to $175 million going to private equity investments, and €100 million ($110.7 million) going to targeted real estate funds with investments primarily in Germany and Spain.

The board also confirmed Deputy CIO James Nolan as the system’s acting CIO.

The Penn SERS board voted to commit up to $75 million to the KPS Special Situations Fund V, and up to $25 million to the KPS Special Situations Mid-Cap Fund. Both funds focus on a strategy of control buyouts of operationally stressed and distressed companies in industries such as basic materials, industrial components and equipment, and branded consumer goods.

The board also voted to commit up to $75 million to Wind Point Partners IX-A, a North American mid-market buyout fund that targets companies in the consumer products, industrial products, and business services sectors.

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Both the KPS and Wind Point commitments represent follow-on commitments resulting from previous investment relationships with Penn SERS.

Another commitment made by the board allots €100 million to two real estate asset class investments sponsored by Activum SG Capital Management Limited. The funds will focus on value-add opportunistic investments in a variety of property types that are located primarily in Germany and Spain.

The board also appointed Nolan as acting CIO effective Aug. 3. Nolan will have the powers and duties of the CIO until the board appoints a permanent CIO to replace W. Bryan Lewis, who is leaving the system Aug. 2 to pursue another career opportunity.

 “We are confident that Jim Nolan, along with senior investment staff and other SERS investment professionals, have the knowledge and skills to maintain a steady course until the time a new Chief Investment Officer is appointed,” Penn SERS Executive Director Terrill Sanchez said last month when Nolan was recommended by the investment committee to become interim CIO.

Nolan joined Penn SERS in 2015 as deputy CIO, and has focused on asset allocation, risk management,  and in-cost containment across all asset classes. He also oversees the investment structure of the deferred compensation plan and recently led the rollout of the new defined contribution plan’s investment structure that launched at the beginning of the year.

Prior to joining Penn SERS, Nolan served for more than two decades in the corporate arena in managerial roles overseeing corporate defined benefit plans covering internally and externally managed investments, and defined contribution and deferred compensation plans.

 Additionally, the board also moved forward on plans to realign options in the Penn SERS deferred compensation plan by incorporating BlackRock LifePath target date funds (TDFs) as the default investment option for members and participants.

Penn SERS said the realignment is part of an ongoing effort to streamline and simplify investment options for members and participants. The TDFs, which were originally rolled out as part of the SERS defined contribution plan, will replace four profile risk-based funds that are made up of a static allocation currently in the deferred compensation plan.

The board also added the Global Non US Stock Index Fund, which includes Canada and emerging markets, to the deferred compensation plan to replace the International Company Stock Index Fund, which excludes Canada and emerging markets.

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