The Washington State Investment Board (WSIB) has made new commitments to private equity and tangible assets firms of up to $1 billion as it continues to build its private markets portfolio to replace liquidating funds.
The biggest commitments announced on Thursday include up to $400 million to two funds managed by private equity firm Leonard Green and Partners in Los Angeles.
The $400 million is split into two funds, up to $200 million in Jade Equity Investors, a North American-focused middle-market buyout fund, and up to $200 million in Green Equity Investors VIII, which is also a North American buyout fund.
The $108 billion WSIB has invested in four prior Leonard Green and Partners funds since 2003.
WSIB also committed up to $200 million in Advent International’s Advent Latin American Private Equity Fund VII. The fund will invest in private equity investments across Latin America.
The investment board has invested in three prior Advent Latin American Funds since 2007.
Some institutional investors have avoided Latin America for private equity investments because of concerns over market volatility in the region. Instead, they have put their focus on North America, Europe, and Asia.
WSIB has been more aggressive in seeking out global private equity funds in areas such as Latin America as it attempts to maintain its more 20% commitment of the pension fund to private equity. Private equity investments exceed $23 billion at WSIB.
Its private equity 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).
Both pension plans want to build larger private equity portfolios but have been unable to obtain commitments in some over-subscribed funds. Institutional investors have been battling for limited spaces in new funds sponsored by private equity firms that have had superior returns in the past.
WSIB was one of the first private equity investors in 1981. It has been able to maintain strong relations with private equity firms and has had better luck than other institutional investors in getting the commitments it wants.
Since last April, WSIB has made more than $3 billion in commitments to new private equity funds.
WISB also made $400 million in new commitments to tangible asset funds on Thursday. An up to $100 million commitment was made to Ecosystem Investment Partners and another $100 million to a WSIB separate account, EIP Alki Partner, which will invest alongside the Baltimore firm’s investments.
EIP focuses on land-based environmental offset markets, according to its website. The firm says it acquires properties with degraded aquatic resources or species habitats, restores them, and then acquires in the process mitigation credits. The firm says it makes money by then selling the credits to
governmental agencies and private firms involved in development. The credits are used to mitigate negative environmental impacts in energy, real estate, and transportation projects.
WSIB also invested up to $200 million in Toronto-based Sprott Private Resource Streaming, which targets income-focused investments in the gold and silver mining sector.
The tangible assets portfolio makes up $5.5 billion or 5.1%, of WSIB’s total portfolio.
WSIB has an approximate 40% allocation to private markets when counting all of its private market investments like real estate, infrastructure, and tangible assets. The high allocation to private markets is fairly unique among public pension plans and more resembles portfolios that would be found at endowments of Ivy League universities.
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Tags: Gary Bruebaker, Pension, Private Equity, Washington State Investment Board