by Andrés Ramos, Content Marketing Specialist – Nasdaq Private Fund Solutions
Pension plan insights
Each quarter State of Michigan Retirement System issues a Private Equity Review that provides a deep dive into the pension plan’s PE portfolio. In June, the review covering performance and investment activity through 1Q 2021 was one of the most popular documents with users of eVestment Market Lens: a searchable library of tens of thousands of documents from more than 8,000 public and corporate plans in the U.S., U.K. and Canada.
This article will highlight some of the major takeaways from the document and discuss why Market Lens users value the insights found in the review.
Recent commitments from SMRS
The review discloses twelve commitments totaling $980 million to private equity funds in the first quarter of 2021. Two notable commitments among the twelve are the in-state investments made to Barings and GCM Grosvenor. The commitments are part of the Michigan Small Emerging Manager Fund, an initiative that “invests across small and emerging manager fund, co-investment, and secondary opportunities.”
While not a requirement, the program has an emphasis on Michigan-based managers or those with an investment focus that has a nexus to Michigan. In-state investment programs are a growing trend for state pension plans, and the Michigan Small Emerging Manager Fund represents one such program.
Recent commitments help a fund manager understand who they may have lost out to during a recent capital raise, or who they could anticipate competing against in a subsequent fundraising cycle.
SMRS private equity portfolio by the numbers
Portfolio construction data from a pension plan is valuable intel for both fund managers and institutional investor peers. State of Michigan’s review features a thorough breakdown of their portfolio including by strategy type, investments by industry, investments by region, and vintage year.
Below is a sampling of the data provided by in the update:
|Top 5 Sponsors|
|1. HarbourVest – $10.7 billion|
|2. Grosvenor – $2.5 billion|
|3. KKR – $2.4 billion|
|4. Blackstone – $2.0 billion|
|5. Advent International – $1.8 billion|
|Buyout – 48.3%|
|Fund of Funds – 22.9%|
|Venture Capital – 11.5%|
|Special Situations – 9.8%|
|Mezzanine – 2.1%|
|Other – 5.4%|
|United States – 78.1%|
|Western Europe (ex UK) – 8.8%|
|Asia/Africa – 6.7%|
|United Kingdom – 4.2%|
|Canada – 1.0%|
|Other – 1.2%|
State of Michigan Retirement System offers this strategy update in the review:
The strategy for the next twelve months will focus on new sponsors raising capital and existing sponsors raising successor funds. This may be a combination of buyout, venture capital, secondary, and growth equity funds seeking new commitments. Co-investments continue to play an important role in both averaging down costs and targeting specific investments with attractive risk/return characteristics.
GPs hoping to fundraise from SMRS over the coming year can use this insight to understand if their fund strategy is the pension plan is targeting and whether it makes sense to spend any time or resources pursuing the investor.