Nebraska’s Chief Investor Discusses His Conservative Approach to Alternative Investors

The Nebraska Investment Council (NIC)  has approved a pacing plan for its private equity portfolio spanning the next several years, and State Investor Officer Michael Walden-Newman told CIO he couldn’t be happier with his team’s conservative strategy for private markets fund managers.

The $16 billion NIC forecasted to commit $150 million each year in private markets until 2025 to help maintain the portfolio’s 5% target towards private equity investments. The pacing plan for 2019 commitments largely involved increasing existing commitments to private equity managers following buyouts/growth and special situation strategies; Green Equity VIII ($50 million), Wynnchurch V ($50 million), and Dover Street X ($50 million).

After joining the NIC, Walden-Newman increased the minimum commitment size to private markets managers to $50 million from $30 million, with the primary reason being to limit the amount of private markets managers the council has commitments to.

“I don’t want a farmer to call from a town in Nebraska and ask me about one of our private equity managers, and not be able to recall off the top of my head what that manager does to a fellow Nebraskan,” Walden-Newman said.  “If we get a portfolio that’s too big, I’m afraid that can happen.

“I want meaningful relationships, and a significant size to keep the number of managers down. We’re a very conservative investor, particularly when it comes to alternative investors.”

He also discussed the council’s approach to new or emerging markets managers, saying his team is only comfortable doing business with experienced investors.

“The NIC is not the investor for seed money, or emerging managers, instead we prefer a solid track record, with managers who have a proven ability to replicate their expertise over several funds,” Walden-Newman said. “You’re not likely to see us in a fund 1, maybe not even a fund 2, but a fund 3 or 4 could work.

“It’s just a better way to run a program with a small staff like ours.”

The NIC has made approximately $1.5 billion commitments to date across 53 different investments, according to a report.

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