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Private Markets Monthly Monitor

Published each month, this report aggregates and analyzes data on 475 public plans’ reported fund commitments, as well as the news and documents of most interest to users of the eVestment Market Lens platform across Private Equity, Private Debt, Real Estate and Real Assets.

Private markets firms can use this information to gain insight into the fund strategies most popular with investors, the most active plans and consultants and the latest fundraising activity of their peers.

Overview

In May 2021, twenty-six pension plans reported $4.3 billion in commitments to Private Equity funds. The total represents 65 individual commitments with an average size of $66.6 million.

The Latest in Private Equity:
CalSTRS – Private Equity Policy Revisions
Published: July 8 (added to Market Lens on July 1)

Which LPs will be making commitments to Private Equity funds?
In addition to tracking past commitments and providing unique LP insights, the eVestment Market Lens platform tracks investors’ asset allocation weightings. With new screening functionality, in a few clicks you can see exactly which LPs are underweight against various asset classes, including private markets, and by how much.

Top Funds & Activity

Texas County reported the most Private Equity commitments in May with eight across five fund managers for a total of $525 million. The pension plan’s largest reported commitment of $150 million went to Hellman & Friedman X. TA Associates received a reported $200 million from Texas County via commitments to the fund manager’s latest flagship fund (TA XIV) and TA Select Opportunities II.

Los Angeles City ERS (LACERS), was also active in May reporting seven commitments totally nearly $250 million. According to plan documents, the largest single commitment from LACERS of $57.5 million went to Genstar Capital Partners X. At the other end of the spectrum, LACERS reported an $11 million commitment to Mill Point Capital Partners II, a fund manager that LACERS initially committed to as part of their Emerging Investment Manager Policy. Mill Point Capital Partners I, a 2017 vintage fund has earned a net IRR of 30.5% for the pension plan.

The largest single commitment reported in the month, $300 million from Minnesota State Board, went to Blackstone Capital Partners Asia II. The investment memorandum for the commitment notes that the fund will make, “large scale control and control-oriented private equity investments in the Asia Pacific region, primarily India, China, Australia, Southeast Asia, Korea and Japan.” In terms of total dollars committed, Minnesota State Board was the most active pension plan in May with a total of $750 million. The plan also reported commitments to KKR and TPG.

The most popular destination for capital in May was Insight Venture Partners who saw $340 million in reported commitments from pension plans including Illinois Muni, Orange County ERS, and Texas Muni.

Most Viewed Documents

The most viewed Private Equity document in May was the Private Equity Emerging Manager Discretionary Separate Account Search Request for Proposal Minimum Qualifications document for Los Angeles County ERA (LACERA). In addition to the minimum qualifications required, the document lays out the six categories of evaluation criteria and the overall evaluation process. According to the document, “the RFP mandate recommendation is for a $400 million allocation to be deployed over four years.”

The mandate is an especially compelling opportunity for fund managers because participant managers in LACERA’s emerging manager program can “graduate” to the core private equity program and receive subsequent commitments from the pension plan. To date four managers have made this transition.

Another popular Private Equity document from May was the FY 2022 Proposed Pacing Plan from Alaska Permanent. The document outlines the pension plan’s goal of allocating $1.6 billion to private equity and special opportunities in fiscal year 2022. Commitments will be made across funds, co-investment deals and direct investments. Alaska Permanent will have the flexibility to increase or decrease total commitments by $550 million meaning total commitments could be over $2 billion for the pension plan.

HgCapital’s pitch presentation for Connecticut Retirement was also widely viewed in May. The presentation deck covers the three unique fund series offered by HgCapital (each targeting software companies in different enterprise value ranges) and highlights the firm as the fourth largest Private Equity manager in Europe.

Overview of Reported May-2021
Commitments 65
Total Amount (USD MM) $4,330
Average Amount (USD MM) $67
Total LPs 26
Most Active Public Plans by
Number of Commitments
L3M
CalPERS 17
LACERA 12
Texas County 12
Wisconsin Inv Board 12
Most Active Public Plans by
Commitment Amount (USD MM)
L3M
CalPERS $4,283
Washington State (WSIB) $3,800
CalSTRS $1,677
Consultants Providing Most
Recommendations
L3M
Hamilton Lane 18
Aksia 17
Meketa Investment Group 13

Overview

In May 2021, seventeen pension plans reported $2.4 billion in commitments to Private Debt funds. The total represents 26 individual commitments with an average size of $91.9 million.

The Latest in Private Debt:
Chicago LABF – Request for Proposal 
Published: June 29

Which LPs will be making commitments to Private Debt funds?
In addition to tracking past commitments and providing unique LP insights, the eVestment Market Lens platform tracks investors’ asset allocation weightings. With new screening functionality, in a few clicks you can see exactly which LPs are underweight against various asset classes, including private markets, and by how much.

Top Funds & Activity

The most active allocator to Private Debt in May was UK-based pension scheme, Border to Coast, who reported six commitments totaling over £575 million. The largest commitment reported, $160 million went to Churchill Middle Market Senior Loan Fund IV, a strategy focused on direct lending to mid-market companies in North America. Other fund managers receiving commitments from the pension scheme include Ares, Fortress, and HPS.

Also active in the month was New Jersey Division of Investment with nearly $530 million in reported commitments. The plan’s largest commitment of €150 million went to CVC Capital Partners EU DL II Co-Invest Fund. The investment recommendation for the commitment states that the fund, “is expected to be seeded with seven to eight loans that will be reallocated from the Firm’s existing CVC Credit Partners European Direct Lending Fund II.” This unconventional approach, along with the fund’s 12-month investment period, will allow the pension plan to instantly increase its exposure to private debt and reduce its underweight allocation.

Louisiana Teachers and Illinois Muni were the only other plans to report more than a single commitment to Private Debt in May. Louisiana Teachers reported commitments of $75 million each to Intermediate Capital Group and Summit Partners while Illinois Muni reported $40 million commitments to both ABRY Partners and Sterling Group.

Ares was the most popular destination for capital in the moth with Houston Police, Jacksonville Police & Fire, and Sacramento County ERS joining Border to Coast in reporting commitments to the fund manager.

Most Viewed Documents

May’s most popular Private Debt document was a pacing plan and review for Chicago Police from their consultant NEPC. To reach their 4% target allocation, NEPC has recommended that the pension plan commit $40 million annually to Private Debt funds for the next several years. For 2021, half of this figure is already committed, but Chicago Police is actively seeking to allocate $20 million in a niche lending or opportunistic credit fund. The document also features NEPC’s outlook on the various strategies within Private Debt.

Educational materials and presentations are regularly among the most popular documents on Market Lens, and May was no exception. Consultant Marquette Associates’ presentation on Private Debt for Chicago Muni was popular with Market Lens users in May and focused on the opportunity set within the asset class in post-crisis environments. The presentation notes significant yield premiums and downside protections as reasons Private Debt is attractive in the current market.

Also widely viewed in the month was the Opportunistic Credit Request for Proposals from Massachusetts Port Authority ERS. In consultation with their consultant Wilshire, the pension plan is seeking to commit $40 million to no more than two opportunistic credit funds with a term of up to seven years. The evaluation criteria for RFP equally weights five categories: 1) Strength of organization and team 2) Investment philosophy and process, including ESG 3) Track record 4) Approach, commitment, and strategy towards EEO and DE&I 5) fees.

Overview of Reported May-2021
Commitments 26
Total Amount (USD MM) $2,388
Average Amount (USD MM) $92
Total LPs 17
Most Active Public Plans by
Number of Commitments
L3M
Texas County 7
Border to Coast Pool 6
Iowa PERS 5
New Jersey 5
Most Active Public Plans by
Commitment Amount (USD MM)
L3M
CalPERS $2,584
New York State Common Retirement Fund $841
CalSTRS $818
Consultants Providing Most
Recommendations
L3M
NEPC 6
Wilshire 6
Meketa Investment Group 5

Overview

In May 2021, twenty-four pension plans reported $2.8 billion in commitments to Real Estate funds. The total represents 35 individual commitments with an average size of $81.6 million.

The Latest in Real Estate:
San Diego City ERS – Non-Core Real Estate Portfolio Analysis
Published: July 8 (added to Market Lens on July 6)

Which LPs will be making commitments to Real Estate funds?
In addition to tracking past commitments and providing unique LP insights, the eVestment Market Lens platform tracks investors’ asset allocation weightings. With new screening functionality, in a few clicks you can see exactly which LPs are underweight against various asset classes, including private markets, and by how much.

Top Funds & Activity

On a total dollars committed basis, Minnesota State Board was the biggest allocator to Real Estate in May with $600 million in reported commitments. This total was comprised of two $300 commitments to Carlyle Realty Partners IX and Brookfield Strategic Real Estate Partners IV respectively. Minnesota State Board has invested previously with both fund managers.

Carlyle Realty Partners IX also received reported commitments from Connecticut Retirement for $200 million and District of Columbia Retirement Board for $50 million.

Another notable commitment reported in May was Mass PRIM’s $250 million allocation to a fund-of-one vehicle managed by Oaktree. According plan documents, the vehicle will invest alongside Oaktree’s existing real estate debt and European strategies with Mass PRIM maintaining the ability to set investment parameters and limit exposure to certain property types or markets.

Louisiana Firefighters and Fairfax County Educational were also active in the month with each reporting three commitments to Real Estate funds albeit at much smaller check sizes than the previously mentioned pension plans. Louisiana Firefighters spread $24 million across three equally sized commitments to AEW Capital, ASB Capital, and Heitman while Fairfax County Educational reported commitments to Atlas Capital Group ($13.5 million), Investors Diversified Realty ($30.7 million), and IPI Data Center Partners ($13.5 million).

Most Viewed Documents

As it was for Private Equity, Alaska Permanent’s FY 2022 Proposed Pacing Plan for Real Estate was among the most read documents for the asset class in May. The pension plan’s current allocation to Real Estate is approximately 7%  against a target of 12%. Over the next three fiscal years, Alaska Permanent will seek to commit $800 million annually to the asset class. In terms of sector focus for these commitments, the plan states that they will be comprised of, “$400 million to multi-family, $150 million to industrial, $250 million to office, and $0 to retail annually on average.”

Another popular Real Estate document in the month was consultant Townsend Group’s Real Estate Portfolio Performance Measure Report for their client Los Angeles Fire & Police. Through the end of 2020, the pension plan was slightly under allocated against their target for Real Estate with approximately $500 million of capital available to allocate. Based on commitment activity from 2018 through 2020, the plan typical makes between 3 to 5 commitments a year with bites sizes ranging from $30 million to $50 million. The report also features a list of the top 10 fund manager relationships for the pension plan, which is valuable intelligence for a fund manager seeking to pitch to Los Angeles Fire & Police.

Carlyle Group’s presentation for Carlyle Realty Partners IX, mentioned in the Top Funds & Activity section, was also popular with Market Lens users in May. The slide deck was made available in Market Lens on May 12, 2021, the same day it was presented to Connecticut Retirement.

Overview of Reported May-2021
Commitments 35
Total Amount (USD MM) $2,854
Average Amount (USD MM) $82
Total LPs 24
Most Active Public Plans by
Number of Commitments
L3M
New York City Police 8
New York State Common Retirement Fund 5
New York City Fire 5
Connecticut 5
Most Active Public Plans by
Commitment Amount (USD MM)
L3M
CalPERS $1,000
New York State Common Retirement Fund $901
CalSTRS $600
Consultants Providing Most
Recommendations
L3M
NEPC 11
Townsend Group (acquired by Aon) 6
ORG Portfolio Management 3

Overview

In May 2021, fifteen pension plans reported $1.1 billion in commitments to Real Assets funds. The total represents 18 individual commitments with an average size of $58.9 million.

The Latest in Real Assets:
Orange County ERS – Real Assets Performance Update
Published: June 23

Which LPs will be making commitments to Real Assets funds?
In addition to tracking past commitments and providing unique LP insights, the eVestment Market Lens platform tracks investors’ asset allocation weightings. With new screening functionality, in a few clicks you can see exactly which LPs are underweight against various asset classes, including private markets, and by how much.

Top Funds & Activity

The largest Real Assets commitment reported in May was New Jersey Department of Investment’s $160 million allocation to EQT Infrastructure V. The investment memo notes that the commitment will help the pension plan diversify its Real Assets portfolio away from energy. Additionally, the memo notes that, “the fund’s unique, diversified approach allows the team to invest in sectors with strong tailwinds such as digital infrastructure and renewables, and capitalize on early trends such as social infrastructure.”

Texas Muni reported the second largest commitment in the month via a $150 million allocation to Magnetar Capital’s MTP Climate Infrastructure Fund. Magnetar is an existing relationship for Texas Muni.

Also active in the month was North Dakota State Investment Board with two reported commitments totaling $125 million. Both commitments went to infrastructure funds with $65 million flowing to ISQ Global Infrastructure Fund III and $60 million to Macquarie Infrastructure Partners V.

I Squared Capital also received a $10 million commitment from Plymouth County Retirement Association.

Only two other funds in the month received more than a single commitment: KKR Diversified Core Infrastructure Fund and Asterion Industrial Infra Fund II.

Most Viewed Documents

The most popular Real Assets document with Market Lens users in May was the Private Infrastructure Review for Texas ERS. The review offers a portfolio and market updates as well as a summary of achievements, goals, and objectives for the pension plan. Through March 31, 2021, the private infrastructure program for Texas ERS has made 20 fund commitments and 26 co-investments for a total of $2.38 billion committed. After committing $414 million against a target of $450 million in fiscal year 2020, the pension plan is seeking to commit $475 million to the asset class in fiscal year 2021.

Also popular in the month was consultant Hamilton Lane’s fourth quarter performance update for Santa Barbara County ERS. The report notes that through December 31, 2020, on an IRR-basis, the pension plan’s private real return portfolio has outperformed its public benchmark, the Consumer Price Index – All Urban Consumers, across 1-, 3-, and 5-Year time horizons. The portfolio also outpaced the Thomson/Cambridge Natural Resources and Infrastructure peer benchmark across those same periods. In 2021 Santa Barbara County ERS will seek to deploy a further $90-$110 million to Real Assets.

Kentucky Retirement Systems’ Investment Recommendation Memo for Prologis Targeted U.S. Logistics Fund was another popular document with Market Lens users in May. The proposed commitment of $100 million will be the third that the pension plan has made with Prologis, a manager focused purely on US industrial real estate.

Overview of Reported May-2021
Commitments 18
Total Amount (USD MM) $1,060
Average Amount (USD MM) $59
Total LPs 15
Most Active Public Plans by
Number of Commitments
L3M
Oregon PERS 5
Kern County ERA 4
New Jersey 3
Most Active Public Plans by
Commitment Amount (USD MM)
L3M
Oregon PERS $700
Washington State (WSIB) $400
New Jersey $360
Consultants Providing Most
Recommendations
L3M
Verus 4
Hamilton Lane 4
Meketa Investment Group 4

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Data included in this report is sourced exclusively through information available in our Market Lens tool, a one-stop platform offering access to underlying documents and information from public plans and their consultants, including investor profiles, asset allocation studies, commitment pacing plans, peers’ pitchbooks and much more.

Clients use this information for up to the minute insights into market trends, and to better identify prospective investors and access more granular information to tailor pitches and presentations to accelerate their fundraising and enhance investor relations.

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