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Public pension plans keep pace with commitments in 2020 despite challenges of virtual due diligence

by Andrés Ramos, Content Marketing Specialist – eVestment Private Markets

New data from eVestment Private Markets

Published February 9, 2021, the year-end edition of the eVestment Private Markets Monthly Monitor found that public plans investors committed $154.6 billion to private funds in 2020. The amounted to a 2% increase from the previous year’s mark and indicate that pension plans were not afraid to put capital to work during the pandemic.

The report, available here, explores public pension plan commitment activity across the various private markets asset classes and offers insights the top GPs and allocators from the year.

Here are some top takeaways from the full report:

Private Equity

Reported commitments to private equity fund grew 20% year-over-year to $83.1 billion with CVC Capital Partners taking the crown as the number one destination for capital in the year. With 35 reported commitments, the fund manager averaged nearly three commitments a month for a year-end total of $5.2 billion raised from pension plans.

The most active private equity allocator in 2020 was CalPERS with a whopping $14.6 billion in reported commitments to the asset class. This figure is more than double the $6.5 billion reported by second ranked New York State Common Retirement Fund (NYSCRF) and nearly a threefold increase over the $5.3 billion that CalPERS reported in 2019. NYSCRF also ratcheted up their commitments in 2020, increasing commitments 36% from the previous year.

These two pension plans were not alone in increased commitment activity, as 7 of the top 10 pension plan allocators in 2020 reported larger total commitment figures than they did in 2019.

Private Debt

Private debt saw $33.7 billion in reported commitments from public pension plans in 2020, a 31% increase from the segment’s final 2019 figure. The increased activity suggests that pension plans sought to take advantage of market dislocation caused by the pandemic by allocating to strategies focused on distressed opportunities and special situations.

Sixth Street Partners took the top spot in 2020 in terms of pension plan private debt commitments, with $2.5 billion reported across seven allocations.

HPS Investment Partners lead the way in 2020 in terms of number of private debt commitments. Ten different pension plans reported a total of twelve commitments to both commingled funds and fund-of-one vehicles managed by HPS.

CalPERS was the most active private debt allocator in the year with $4.5 billion in commitments. The plan’s $2.0 billion commitment to Goldman Sachs’ West Street Solutions Fund was the largest reported by a pension plan to any commingled fund in 2020.

Real Estate

Real estate was amongst the economic sectors hit hardest by the COVID-19 pandemic and those effects were clearly felt by real estate managers fundraising through 2020. For the year, reported commitments by public pension plans totaled $24.4 billion, a 31% decrease from 2019.

Torchlight Investors was far and away the most successful real estate manager fundraising from pension plans in 2020. The fund manager finished the year with 14 individual commitments reported for a total of $866 million.

New York State Common Retirement Fund (NYSCRF) took the top spot in 2020 as the most active allocator to real estate. The pension plan allocated $3.3 billion across 24 commitments to 21 different fund managers. In addition to over $700 million in commitments to PGIM Real Estate, NYSCRF committed $600 million to Fairfield Residential and nearly $450 million to Ares Management.

Real Assets

Public pension plans’ reported commitments to real assets funds dropped precipitously in 2020 to a total of $13.3 billion, a 38% decrease from 2019.

Increased activity through the second half of 2020 combined with a renewed focus on infrastructure investment from the new administration in the United States should be an encouraging sign for real assets fund managers moving into 2021.

Stonepeak Infrastructure Partners took the number one position in 2020 with $2.8 billion in total commitments from public pension plan investors. The total represents 17 individual commitments from 13 different plans.

Data and Insights on Top GPs & Allocators

Read the report to find out where public plans were allocating capital through the height of the pandemic and how well fund managers navigated virtual fundraising processes.

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