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Alternatives

NY State Pension Invested $2.7 Billion in Alts Just Before Market Tanked

The $210.5 billion fund invested more than $2.2 billion in private equity and no money in public equities.
By Michael Katz

In a move that could prove rather timely as global stock markets continue to tumble from the impact of the COVID-19 pandemic, the $210.5 billion New York State Common Retirement Fund (NYSCRF) last month made commitments totaling nearly $2.7 billion into alternative investments, while declining to add anything to its global equity portfolio.

The lion’s share of that $2.7 billion has been committed to private equity investments, including $2 billion into the Neuberger Berman NYSCRF NB Co-Investment Fund II. That investment is comprised of two tranches of $750 million and one tranche of $500 million. The objective of the fund is to opportunistically co-invest primarily alongside the fund’s private equity managers.

Also within the private equity portfolio, the fund committed $200 million to Vista Equity Partners’ Vista Foundation Fund IV, L.P. The fund will focus on enterprise software companies that provide mission-critical solutions to various end markets.

And its final private equity investment for the month was for $15 million through the Hamilton Lane/NYSCRF Israel Fund, L.P., which invests in established and emerging managers in Israel, focusing on investments primarily in the life sciences and technology sectors.

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Within its real estate portfolio, the fund invests with real estate opportunity funds, affordable housing, mortgages, and joint ventures with a property-specific mandate. Investment activity includes new commitments to general partners, investments made through joint ventures and affordable mortgages. The fund made three real estate investments in February.

The largest real estate investment was a $200 million commitment to the Westbrook Real Estate Fund XI, L.P, plus a $100 million commitment to a co-investment vehicle. The Westbrook Real Estate Fund XI is the latest in a series of value-added global commingled real estate funds managed by Westbrook Partners that invests in real estate in North America, Europe, and Japan.

The NYSCRF also funded a mortgage of just under $2.9 million in a 96-unit affordable housing property in Webster, New York, under an agreement with the Community Preservation Corporation, which is a nonprofit affordable housing and community revitalization finance company. NYSCRF also funded a mortgage of more than $500,000 in a six-unit affordable housing property in Potsdam, New York, which was also under its agreement with the Community Preservation Corporation.

And within its real assets portfolio, the fund made a $150 million commitment to the SASOF V LP fund managed by Carlyle Aviation Partners. The fund is a closed-end aviation assets fund focused on acquiring, managing, and leasing in-production, mid-life aircraft and engines. The NYSCRF invested another $100 million in the Brookfield Infrastructure Fund IV CO-INVEST, L.P., which will invest in renewable co-investment opportunities offered by Brookfield Infrastructure Fund IV, which include solar, wind, hydro, and battery storage.

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Home > News > Asset Management Culture > Pandemic Causes Railway Pension to Leave Taxpayers Shouldering £8 Billion Deficit
Asset Management Culture

Pandemic Causes Railway Pension to Leave Taxpayers Shouldering £8 Billion Deficit

The UK-based Transportation Railway Scheme is deliberating ways to support the troubled railway pension.

By Steffan Navedo-Perez

Consumer demand for the UK’s transportation network has fallen significantly due to the coronavirus, prompting the country’s government to nationalize the system, including its pension.

The pension system was originally held in the private sector, but the government’s takeover of the rail network includes ownership and responsibility for the governance of the pension fund and tackling its funding issues. Deficit funding contributions were previously paid into the pension by members and employers.

Now the beleaguered £29 billion ($36 billion) pension is left with an £8 billion deficit that the government may leave up to the taxpayers to fund, according to the Telegraph.

The government stated that nationalizing the railway network would lead to the most positive outcome as the coronavirus situation evolved. “Allowing operators to enter insolvency would cause significantly more disruption to passengers and higher costs to the taxpayer,” the Department for Transport said in a statement.

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The Telegraph quoted the criticism of pension consultant John Ralfe: “In March 2018, the total train company deficit was £5 billion—much more than the ‘official’ deficit—and it will be around £8 billion today, given falls in stock markets,” Ralfe said. “The government must be entirely honest about the hidden cost of rail ‘renationalization,’ with taxpayers taking on the huge deficits in all the train company pension schemes.”

“These are unprecedented times and the rail network is central to our national resilience,” Rail Minister Chris Heaton-Harris said in a statement. “We are taking decisive action across the board to ensure vital rail services continue, allowing those people who cannot work at home to get to work.”

The funding troubles that the railway pension faces may soon be seen by other institutional investors with significant exposures to global equity markets. Moody’s recently reported that US public pensions lost $1 trillion as a result of the heavy market volatility caused by the pandemic, and Fitch noted that the crisis is “crushing” global GDP growth. S&P Global forecast a global recession later this year.

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