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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 Private Markets 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 February 2021, 30 pension plans reported $4.8 billion in commitments to Private Equity funds. The total represents 74 individual commitments with an average size of $64.6 million.

As of February 28, 2021, 121 public plans were under allocated against their Private Equity target allocations, representing $43.8 billion of potential commitments available for fund managers.

The Latest in Private Equity:
Fresno County ERA Private Equity Portfolio Update
Published: April 5, 2021

Top Funds & Activity

On a total dollars committed basis, Minnesota State Board was the most active allocator to Private Equity in February with five reported commitments totaling $1.25 billion. The three largest, each totaling $300 million, went to Adams Street, Hellman & Friedman, and KKR. All five of the reported commitments went to fund managers with whom Minnesota State Board had previously invested.

In terms of total commitments reported, Alaska Permanent was the most active allocator in the month with eight. The pension plan allocated a total of $397 million for an average bitesize of about $50 million. GTCR and Centerbridge Partners were the recipients of the largest commitments from Alaska Permanent with $75 million to each. Notably, $117 million of the plan’s commitments went to co-investment opportunities.

Illinois Teachers reported $686 million worth of commitments including $400 million to Adams Street, the largest individual commitment reported in February. Adams Street is a new manager relationship for the pension plan and their commitment is broken out evenly between two separately managed accounts investing in Europe and Asia respectively. According to plan documents, Adams Street will deploy the capital over a three-year period and, “identify and access managers that can become scaled core relationships managed by the IL TRS staff.”

UK-based pension schemes Leicestershire and London Borough of Barnet also reported commitments to Adams Street in February making the fund manager the joint most popular destination for commitments along with GTCR. LACERS and Santa Barbara County ERS joined Alaska Permanent in reporting commitments to GTCR in the month.

Most Viewed Documents

As previously discussed on our blog, the most viewed Private Equity document in February was the Private Markets Pacing Analysis for Vermont Pension Investment Committee (VPIC). The document, prepared by consultant RVK, highlights VPIC’s target allocation for private equity and outlines recommendations for reaching that target. VPIC will make $90 million in new commitments in 2021 and gradually increase that figure in subsequent vintages. RVK notes that in 2021 and 2022, 70% of commitments will be made to fund of funds strategies before gradually moving to a 50/50 split with direct funds in the vintages thereafter.

Another popular document in the month was the Strategic and Tactical Plan presented by consultant StepStone Group to the client Los Angeles Water & Power. In 2021 the pension plan will target $550 million in commitments to further their goal of reaching 10% exposure to Private Equity. While the main focus of the tactical plan is to continue allocating to “existing, high-quality” fund managers, Los Angeles Water & Power will also, “develop new manager relationships through commitments to Growth Equity, Europe-focused funds and Special Situations funds in order to diversify exposure across multiple Private Equity sectors.”

GP pitch decks are always popular with Market Lens users and in February the most viewed Private Equity presentation was that of Insight Partners and their Opportunities Fund I. According to the deck, the fund will target minority investments in high quality software companies using convertible, preferred equity.

Overview of Reported Feb-2021
Commitments 74
Total Amount (USD MM) $4,779
Average Amount (USD MM) $65
Total LPs 30
Opportunities for GPs As of
28/02/21
Public Plans Underallocated vs Target 121
Total Underallocated $43.8bn
Most Active Public Plans by
Number of Commitments
L3M
CalSTRS 19
Alaska Permanent 18
Oregon PERS 13
Most Active Public Plans by
Commitment Amount (USD MM)
L3M
Oregon PERS $2,162
Minnesota State Board $1,250
CalSTRS $1,249
Consultants Providing Most
Recommendations
L3M
Hamilton Lane 24
Marquette Associates 10
Cambridge Associates / Cliffwater 7

Overview

In February 2021, 18 pension plans reported $1.2 billion in commitments to Private Debt funds. The total represents 23 individual commitments with an average size of $48.3 million.

As of February 28, 2021, 52 public plans were under allocated against their Private Debt target allocations, representing $12.1 billion of potential commitments available for fund managers.

The Latest in Private Debt:
Iowa PERS – Search for Private Credit Managers
Published: March 26, 2021

Top Funds & Activity

The largest reported commitment to Private Debt in February was €200 million from New York State Common Fund (NYSCRF) to Blantyre Special Situations Fund II. According to the investment memoranda, the fund, “will invest in stressed and distressed corporate financing opportunities, non-distressed companies requiring complex capital structure solutions and other credit-oriented special-situations investments across the European lower middle-market.” The London-based firm is an existing relationship for NYSCRF.

Indiana Public Retirement System reported two commitments totaling $115 million. The bulk of this capital ($100 million) was allocated to Goldman Sachs’ West Street Strategic Solutions I which plan documents describe as, “a solutions-based investment program seeking to directly originate credit and structured equity investments.” The program will focus primarily on senior secured and junior/unsecured debt. A Blackstone credit co-investment fund was the recipient of remaining $15 million from the pension plan. According to the investment memo, that fund will invest selectively alongside Blackstone Capital Opportunities Fund IV.

Texas County was the only other pension plan to report a commitment of $100 million or more in the month via their allocation to Comvest Advisors.

Ares was the sole Private Debt manager to receive more than a single commitment in February. Alaska Permanent and Vermont Pension Investment Committee reported commitments of $50 million and $75 million respectively. Both commitments were made to direct lending strategies.

Most Viewed Documents

For Private Debt, the most viewed document in February was an educational presentation on the asset class for Fresno County ERA from consultant Verus. The primer covers the basics of Private Debt, reviews different strategies within the asset class, and offers a deep dive into direct lending. Verus also outlines three commitment pacing scenarios for Fresno County ERA, each of which would see the plan committing at least $150 million to the asset class in 2021. For GPs seeking to pitch their Private Debt funds to Fresno County ERA, or any other Verus client, the presentation offers valuable insight into how the pension plan and their consultant view the asset class.

An investment plan from consultant Meketa for their client Illinois SURS was also popular in the month. The plan outlines a 5% target allocation for Private Debt broken out in a 70/30 split between yield-oriented and opportunistic strategies respectively. To reach this target, Illinois SURS will commit $500 million annually across four to six positions with a bitesize range of $50 to $150 million.

On January 22, 2021, Hartford City Municipal ERF announced a $10 million commitment to Crayhill Principal Strategies Fund II. The recommendation for the commitment from their consultant NEPC was added to Market Lens in February 2, 2021 and was one of the most widely viewed documents in the month. In the recommendation, NEPC highlights the fund’s unique strategy as a rationale for investing, “This is an asset-based strategy targeting areas outside of traditional corporate credit. Target areas include equipment leasing, new energy finance, specialty real estate, trade finance, factoring & receivables, regulatory capital, small business lending, royalties, litigation finance and media receivables. Assets are highly structured and meant to avoid dependency on capital markets or some sort of residual value monetization. The underlying assets typically have shorter duration and the types of controls and protections Crayhill can create are quite different from traditional corporate lending.”

Overview of Reported Feb-2021
Commitments 23
Total Amount (USD MM) $1,185
Average Amount (USD MM) $52
Total LPs 18
Opportunities for GPs As of
28/02/21
Public Plans Underallocated vs Target 52
Total Underallocated $12.1bn
Most Active Public Plans by
Number of Commitments
L3M
Oregon PERS 5
Illinois State Board 5
Alaska Permanent / Florida SBA / Indiana PERS 3
Most Active Public Plans by
Commitment Amount (USD MM)
L3M
Oregon PERS $1,125
Florida SBA $515
Virginia Retirement System $300
Consultants Providing Most
Recommendations
L3M
Hamilton Lane 8
NEPC 6
RVK 5

Overview

In February 2021, 22 pension plans reported $2.2 billion in commitments to Real Estate funds. The total represents 30 individual commitments with an average size of $72.8 million.

As of February 28, 2021, 163 public plans were under allocated against their Real Estate target allocations, representing $32.6 billion of potential commitments available for fund managers.

The Latest in Real Estate:
San Joaquin CERA – Real Estate Portfolio & Market Update
Published: April 9, 2021

Top Funds & Activity

Alaska Permanent’s $550 million commitment to Clarion Partners was largest reported for Real Estate in February. The total represents commitments to Clarion Gables Multifamily Trust and a co-investment vehicle. The trust is the perpetual life vehicle through which Clarion Partners manages their ownership of Gables Residential, a multi-family and mixed-use Real Estate developer.

Clarion Partners also received a reported commitment $20 million from San Jose Police & Fire in February to their Clarion Lion Properties Fund. Plan documents note that the fund was well-positioned heading into the pandemic because it was overweighted to the industrial and life sciences sectors while underweight retail, with no exposure to malls.

In terms of number of commitments, New York State Common Retirement Fund was the most active allocator in February. The pension plan reported three commitments in the month with a bulk of the capital ($300 million) going to Blackstone BioMed Life Science Real Estate Partners. The remaining two commitments were made through the pension plan’s emerging manager program which invests in, “newer, smaller and diverse investment management firms.” Brasa Capital and Mandrake Capital Partners each received reported commitments of $15 million for their respective Real Estate strategies.

Minnesota State Board was also active in month, reporting a $200 million commitment to Brookfield and a $100 million commitment to Lubert-Adler Partners.

Most Viewed Documents

Callan’s 2021-2022 Real Estate Investment Plan for Alameda County ERA was the most viewed Real Estate document in February. As of September 30, 2020, the pension plan’s Real Estate exposure stood at 7.8% against a target allocation of 8%. In 2021 Callan has recommended net new commitments of $125 million to core strategies to diversify that portion of the portfolio. Additionally, the consultant has pushed Alameda County ERA to continue exploring non-core funds on an opportunistic basis.

Two pitch presentations from industry titans were also widely viewed in February. The first from Barings pitched their Barings Core Property Fund to Mendocino County ERA. The fund is an open-ended vehicle that targets core, income producing assets primarily in the US. Mendocino County ERA is an existing investor in the fund having committed $10 million in 2011 and $7.8 million in 2017. The presentation gives an update on how the fund has allocated through the pandemic and offers Barings’ outlooks on the Real Estate sectors the fund invests in. The GP is currently seeking to raise $300 million for the fund to, “take advantage of extraordinary market opportunities and realize additional upside in the existing portfolio.”

The other popular deck pitched KKR Real Estate Partners Americas III to San Antonio Fire & Police. KKR describes the fund’s strategy as thematically driven with a focus on transitional assets, real estate companies, and distressed situations. The deck also highlights the fund’s access to the broader KKR platform as a differentiator for the fund.

Overview of Reported Feb-2021
Commitments 30
Total Amount (USD MM) $2,185
Average Amount (USD MM) $73
Total LPs 22
Opportunities for GPs As of
28/02/21
Public Plans Underallocated vs Target 163
Total Underallocated $32.6bn
Most Active Public Plans by
Number of Commitments
L3M
Northern LGPS 13
New York State Common Retirement Fund 6
Illinois State Board 6
Most Active Public Plans by
Commitment Amount (USD MM)
L3M
Alaska Permanent $600
Washington State (WSIB) $500
CalSTRS $419
Consultants Providing Most
Recommendations
L3M
Townsend Group 13
Hamilton Lane 8
Marquette Associates / NEPC 4

Overview

In February 2021, 10 pension plans reported $1.5 billion in commitments to Real Assets funds. The total represents 19 individual commitments with an average size of $78.4 million.

As of February 28, 2021, 115 public plans were under allocated against their Real Assets target allocations, representing $31.2 billion of potential commitments available for fund managers.

The Latest in Real Assets:
State of Michigan Retirement System – Real Estate & Infrastructure Review
Published: March 25, 2021

Top Funds & Activity

UK-based pension scheme Border to Coast was far and away the most active public plan allocator to Real Assets for February, reporting nearly $660 million across five commitments. All five commitments went to infrastructure funds with the largest, $150 million, going to I Squared Global Infrastructure Fund III and the smallest, $100 million, going to Patria Infrastructure Fund IV. According to the investment memoranda, Patria will pursue “’buy and build’ and ‘consolidation’ strategies” in Latin America. Border to Coast also reported commitments to well-known managers BlackRock and Stonepeak Infrastructure Partners.

Also active in the month, albeit at a different magnitude, was Santa Barbara County ERS. The pension plan reported five $15 million commitments to Real Assets funds for a total of $75 million. Three of the five commitments went to infrastructure funds run by Digital Colony, EQT, and I Squared while the remaining two when to timber and agriculture strategies.

The single largest Real Assets commitment in the month was reported by New York State Common Retirement Fund. The plan reported a €250 million commitment to Copenhagen Infrastructure IV, which plans to invest in “renewables assets including: on/off-shore wind, solar, pumped storage, and biomass generation.”

Another notable commitment was North Dakota State Investment Board’s reported $200 million allocation to Grosvenor Customized Infrastructure Strategies III. The pension plan also committed to the previous two vintages of the strategy.

Most Viewed Documents

February’s most viewed Real Assets document was the Inflation Portfolio Review for North Carolina Retirement. Private Real Assets strategies represent approximately 72% of the plan’s inflation portfolio as of December 31, 2020. While the portfolio outperformed its benchmark over 3-, 5-, and 10-year time horizons, it underperformed in 2020, returning -3.5% against 0.7% from the benchmark. Moving into 2021, North Carolina Retirement intends to focus on high conviction opportunities and, “add strategies that are linked to inflation where there are currently gaps in the portfolio combined with opportunities for attractive valuations.”

Another widely viewed document in the month was a fund review of ISQ Global Infrastructure Fund III by consultant Townsend Group. The 38-page review for their client Arkansas Teachers offers a deep dive into all aspects of the fund’s strategy, its predecessor funds, and the fund manager, I Squared Capital. For infrastructure managers seeking to fundraise from Townsend Group clients, the review is an excellent source of intelligence on what the consultant values in a fund manager and an infrastructure strategy.

A presentation for Pompano Beach GERS by J.P. Morgan was the most popular Real Assets pitch deck in February. Presented on February 16, 2021 and made available to Market Lens users on February 12, 2021, the deck offers updates on the fund manager’s Global Maritime Investment Fund and its Infrastructure Investments Fund.

Overview of Reported Feb-2021
Commitments 19
Total Amount (USD MM) $1,490
Average Amount (USD MM) $78
Total LPs 10
Opportunities for GPs As of
28/02/21
Public Plans Underallocated vs Target 115
Total Underallocated $31.2bn
Most Active Public Plans by
Number of Commitments
L3M
Border to Coast Pool 6
New York State Common Retirement Fund 5
Santa Barbara County ERS 5
Most Active Public Plans by
Commitment Amount (USD MM)
L3M
New York State Common Retirement Fund $1,253
Border to Coast Pool $713
Illinois Teachers $400
Consultants Providing Most
Recommendations
L3M
Hamilton Lane 9
Meketa Investment Group 5
Marquette Associates / Willis Tower Watson 3

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