Private Markets Monthly Monitor
Overview
In November 2020, twenty-eight pension plans reported a total of $9.6 billion of commitments to Private Equity funds. The total is the third highest monthly commitment amount reported in 2020 behind June and September.
The average commitment size by public plans was $177 million with a total of 63 commitments reported.
As of November 30, 2020, 116 public plans were under allocated against their Private Equity target allocations, representing $39.9 billion of potential commitments available for fund managers.
Top Funds & Activity
The two most active allocators in November were CalPERS and Maryland State Retirement. CalPERS allocated $4.9 billion to eight fund managers including AlpInvest, EQT, New Mountain Capital, and TPG. The public plan’s most notable allocation was $1.5 billion to first time fund LongRange Capital Fund I. Media outlets suggest that CalPERS is the fund’s only limited partner.
Maryland State Retirement reported nearly $1.2 billion in commitments to nine different general partners. The largest was a $200 million commitment to an Asia-focused fund-of-funds strategy managed by Asia Alternatives. In terms of their commitment sizing, Maryland State Retirement stayed extremely consistent with all their reported commitments to buyout strategy funds. Each of these commitments were between $125 million and $150 million in size.
Excluding CalPERS, the largest commitment reported in November was a $600 million allocation from Washington State Investment Board (WSIB) to GTCR XIII. The commitment was made at the recommendation of the pension plan’s consultant, Hamilton Lane.
GTCR was the most popular destination for capital in the month with four other pension plans in addition to WSIB reporting commitments to the fund manager. The plans reporting commitments were Contra Costa County ERA ($50m), LA Fire & Police ($80m), Mass PRIM ($273m), and Virginia Retirement System ($255m). In their commitment memo, Virginia Retirement System describes GTCR XIII as, “a buyout fund that invests in four core domains: financial services & technology; healthcare; growth business services; and, technology, media & telecommunications.”
Most Viewed Documents
The most popular Private Equity document in November was an update presentation from HarbourVest for their client Imperial County ERS. The presentation offers an overview of the fund manager before diving into the client individual performance and a fund update. Since 2011, Imperial County ERS has committed nearly $90 million to HarbourVest across five funds. The investments have returned a reported 1.4x TVPI and 15.1% IRR for the pension plan.
The Private Equity Review for Contra Costa County ERA (CCCERA) was another widely viewed document in November. The document goes into extensive detail on the pension plan’s approach to Private Equity investing and how the strategy is pivoting moving forward. At present, the plan’s portfolio is composed of fund-of-funds with only 22% exposure to direct investment commingled funds. CCCERA’s goal is to eventually reach 80% exposure to direct investments, and presently they are focused on North American buyout funds.
Also popular in the month was a presentation from Pathway Capital to San Bernadino County ERA. The deck covers Pathway Private Equity Fund VII and the SBCERA Master Custody Account, a $500 million evergreen vehicle that Pathway manages for the pension plan. The presentation was made on November 17, 2020 and made available in Market Lens on November 11, 2020.
| Overview of Reported | Nov-2020 |
|---|---|
| Commitments | 63 |
| Total Amount (USD MM) | $9,576 |
| Average Amount (USD MM) | $177 |
| Total LPs | 27 |
| Opportunities for GPs | As of 30/11/20 |
| Public Plans Underallocated vs Target | 116 |
| Total Underallocated (USD MM) | $39,935 |
| Most Active Public Plans by Number of Commitments |
L3M |
| CalPERS | 18 |
| Ventura County ERA | 17 |
| Wisconsin Inv Board | 13 |
| Most Active Public Plans by Commitment Amount (USD MM) |
L3M |
| CalPERS | $9,627 |
| Washington State (WSIB) | $1,832 |
| Wisconsin Inv Board | $1,240 |
| Consultants Providing Most Recommendations |
L3M |
| Hamilton Lane | 23 |
| Abbott Capital Management | 17 |
| StepStone | 15 |
Overview
Reported commitments by pension plans to Private Debt funds reached $2.9 billion in November with nineteen public pension plans reporting commitments. Like Private Equity, the month was the third most active of the year for Private Debt behind September and June respectively.
The average reported commitment size was $113 million, across a total of 28 commitments.
As of November 30, 2020, 43 public plans were under allocated against their Private Debt target allocations, representing $9.4 billion of potential commitments available for fund managers.
Top Funds & Activity
The most active Private Debt allocator in November was Maryland State Retirement with four reported commitments totaling $500 million. The largest reported commitment totaled $200 million and went to Whitehorse Liquidity Partners. CarVal Investors, LCM Partners, and Shamrock Capital were the other fund managers who received commitments.
Whitehorse Liquidity Partners also received a reported $450 million commitment from New York State Common Retirement Fund (NYSCRF) in November. While the commitment from Maryland State Retirement was to the fund manager’s latest commingled fund, Whitehorse Liquidity Partners IV, the commitment from NYSCRF is to a separate account that plan documents state, “will invest alongside and through Whitehorse vehicles.”
Also active in the month, albeit at far smaller commitment amounts, was Boston Retirement System. The pension plan reported four commitments totaling $75 million. The largest commitment of four, $35 million, went to a distressed co-investment fund managed by GoldenTree. According to a presentation from Boston Retirement System’s consultant, NEPC, the pension plan will target another $40 million in commitments to Private Debt in 2021.
The single largest commitment reported in November was $1 billion from Virginia Retirement Systems to The Carlyle Group. The investment memo notes that the commitment is to Carlyle Diversified Credit, “A fund that will invest opportunistically across credit markets, with a focus on private credit investments.”
Most Viewed Documents
The most viewed Private Debt document in November was the FY21 Private Debt Tactical Plan presented by consultant Aksia to their client Illinois TRS. As of June 30, 2020, Illinois TRS’ Private Debt portfolio stood at 5.6% of plan assets against a target of 8%. To reach their target allocation by 2025, Aksia has recommended commitment pacing of $1 billion per annum. Strategies the plan will target include direct lending, real estate debt, specialty lending, and stressed/special situations. The document goes on to describe the pension plan’s efforts to evaluate and commit to diverse and emerging managers.
Another popular Private Debt document was a “refresher” presentation from Carlyle for Fresno County ERA (FCERA). In 2017, FCERA selected Carlyle to build out the plan’s Private Debt portfolio and achieve their 8% target allocation. The pension plan’s $400 million commitment to Carlyle was allocated across a commingled fund, a separate account, and a fund of funds vehicle. The presentation mentions that the investment period for these commitments ends in September 2021, giving fundraising managers a clear timetable on when FCERA might be back in the market.
An update presentation from consultant Portfolio Advisors for Imperial County ERS was also widely viewed in November. The presentation runs through the pension plan’s current Private Debt holdings before disclosing that as of September 30, 2020 Imperial County has decided to terminate their advisory agreement with Portfolio Advisors.
| Overview of Reported | Nov-2020 |
|---|---|
| Commitments | 28 |
| Total Amount (USD MM) | $2,934 |
| Average Amount (USD MM) | $113 |
| Total LPs | 19 |
| Opportunities for GPs | As of 30/11/20 |
| Public Plans Underallocated vs Target | 43 |
| Total Underallocated (USD MM) | $9,444 |
| Most Active Public Plans by Number of Commitments |
L3M |
| Maryland | 7 |
| Florida SBA | 6 |
| University of Michigan | 4 |
| Most Active Public Plans by Commitment Amount (USD MM) |
L3M |
| Virginia Retirement System | $1,500 |
| Florida SBA | $1,200 |
| Maryland | $900 |
| Consultants Providing Most Recommendations |
L3M |
| NEPC | 9 |
| Cambridge Associates | 6 |
| AndCo Consulting / Callan | 3 / 3 |
Overview
In November 2020, total reported commitments to Real Estate equaled $803.6 million. This figure represents 11 commitments from eight pension plans with an average commitment size of $73 million.
As of November 30, 2020, 126 public plans were under allocated against their Real Estate target allocations, representing $37.4 billion of potential commitments available for fund managers.
Top Funds & Activity
November saw only three public pension plan investors make more than a single commitment, with each reporting two. In terms of total dollars committed, Maryland State Retirement led the way with $300 million in reported allocations. The plan committed $200 million to Castlelake, the largest single commitment reported in the month, and $100 million to AEW Capital.
Strathclyde, a Glasgow, Scotland-based pension scheme, reported two commitments totaling approximately $175 million in November. The larger of the two reported commitments, £100 million, went to Ediston Investment Services and will focus on developing, “a mixed portfolio of income producing and development assets affording regenerative potential within the former Strathclyde regional authority area.” Man GPM received the second reported commitment, £30 million to an affordable housing strategy. In their investment memos, Strathclyde notes that creating a positive ESG impact is one of the objectives for each allocation.
New Mexico SIC was the third pension plan with two commitments in November, reporting a $75 million allocation to KKR and a $50 million allocation to Blackstone. Both reported commitments were made at the recommendation of the pension plan’s consultant, Townsend Group. The KKR commitment is to the fund manager’s KKR Real Estate Partners Americas III fund, which according to the investment memorandum is seeking in part to capitalize on real estate opportunities arising from the COVID-19 pandemic, “The broad themes for this vintage are investment in property types with continued secular growth, and capitalizing on cyclical dislocation. The specifically targeted property types expected to benefit from secular growth are industrial, multifamily, and certain office in innovation markets. Targeted property types in the midst of disruption but with attractive long‐term fundamentals are student and senior housing. Situational opportunities will include distressed hotels.”
Most Viewed Documents
One of the most viewed Real Estate documents in November was the Real Estate Portfolio Review prepared by consultant Townsend Group for their client LACERS. The presentation offers an update on the pension plan’s performance and details of their investment plans and goals for 2021. As of June 30, 2020, LACERS had a total allocation of 5.1% to Real Estate against a target of 7.0%. In dollar terms, the remaining allocation represents $332 million of open commitments for Real Estate fund managers. Moving into 2021, two of LACERS’ notable investment goals include investing in non-core real estate and industrial strategies.
An interesting document among the most viewed in November was titled Remote work and the future of work. The report, written by JP Morgan Asset Management, uses quantitative data and qualitative insights to offer a view on the pandemic’s long-term impact of office real estate. JP Morgan believes that remote work will not be a long-term norm and summarizes their findings with, “While increased remote work is likely to persist, indications are that most employees will eventually return to the office in some manner. In addition, many tenants massively densified their office spaces over the last cycle and largely avoided speculative leasing, reducing the amount of excess space that can be shed. For those reasons, we believe concerns about a dramatic and permanent reduction in future office demand are overblown.”
Another popular November document was a presentation to Tampa General ERF from Blackstone Property Partners. The deck was made available to Market Lens users on November 16, 2020 and presented to the pension plan on November 17, 2020.
| Overview of Reported | Nov-2020 |
|---|---|
| Commitments | 11 |
| Total Amount (USD MM) | $804 |
| Average Amount (USD MM) | $73 |
| Total LPs | 8 |
| Opportunities for GPs | As of 30/11/20 |
| Public Plans Underallocated vs Target | 126 |
| Total Underallocated (USD MM) | $37,359 |
| Most Active Public Plans by Number of Commitments |
L3M |
| New York City ERS (NYCERS) | 5 |
| New York City Teachers | 5 |
| New Mexico SIC / NYSCRF / Alaska Permanent | 4 / 4 / 4 |
| Most Active Public Plans by Commitment Amount (USD MM) |
L3M |
| Alaska Permanent | $1,250 |
| New York State CRF | $646 |
| Louisiana Teachers | $450 |
| Consultants Providing Most Recommendations |
L3M |
| Townsend Group (acquired by Aon) | 14 |
| Stepstone | 13 |
| NEPC | 7 |
Overview
Reported commitments to Real Assets funds by public pension plans in November totaled $1.9 billion, the second highest monthly total reported in 2020 behind June. The total represents 14 commitments from eight pension plan investors. The average reported commitment size was $143 million.
As of November 30, 2020, 97 public plans were under allocated against their Real Assets target allocations, representing $28.9 billion of potential commitments available for fund managers.
Top Funds & Activity
Washington State Investment Board (WSIB) was the most active allocator in the month with three commitments totaling $835 million. The bulk of the capital ($500 million) was allocated to I-Squared Global Infrastructure Fund III and a side car vehicle which will pursue co-investments and extension investments from the core commingled fund. The reported commitment was the largest received by any fund manager in the month.
WSIB also reported commitments to Alinda Capital Partners and Orion Resource Partners. Each of the plan’s allocations were recommended by WSIB’s consultant, Hamilton Lane.
I Squared Capital also received a reported $150 million commitment from Connecticut Retirement in November. According to plan documents, the fund will target opportunities globally in three categories:
- High growth industries such as telecommunications, logistics and renewables
- High growth industries that are defensive but specific to particular regions
- On selective basis, sectors where growth has been negative due to market dislocations
This commitment along with Connecticut Retirement’s reported $100 million commitment to IPI Data Center Partners made the pension plan the second more active allocator in the month.
IPI Data Center Partners continues to be a popular destination for capital in Real Assets, also receiving a reported $150 million commitment from New Jersey Division of Investment in November.
Most Viewed Documents
The most viewed Real Assets document in November was the Review of Real Assets Structure and Investment Plan for Alameda County ERA from their consultant Verus. The review advocates for an increased allocation to infrastructure funds as other real assets strategies have struggled as a result of the pandemic. Verus writes, “The private infrastructure portfolio will be comprised of anchor positions in open-end core funds supplemented by investments in closed-end value add strategies and occasional opportunistic investments when there are attractive market dynamics in a specific sector.” Moving into 2021, Alameda is targeting $40 million in new commitments to infrastructure funds.
Also popular in November was Orange County ERS’ Real Assets Asset Class Review. 2020 saw the pension plan reduce its target allocation for Real Assets from 8% to 5%, split between infrastructure (3%) and energy (2%). As of September 30, 2020, the plan was overallocated to energy based on their new allocation target but have capacity in their infrastructure mandate which stood at 1% against the 3% target. The pension plan made two infrastructure commitments in 2020 for a combined $125 million. Fundraising infrastructure managers can probably anticipate similar activity from Orange Count ERS moving into 2021.
Investing in Farmland, a presentation from consultant Dahab Associates for Pennsylvania Municipal was another widely viewed document in the month. The document, from a September 17, 2020 meeting, was added to Market Lens on November 3, 2020.
| Overview of Reported | Nov-2020 |
|---|---|
| Commitments | 14 |
| Total Amount (USD MM) | $1,865 |
| Average Amount (USD MM) | $143 |
| Total LPs | 8 |
| Opportunities for GPs | As of 30/11/20 |
| Public Plans Underallocated vs Target | 97 |
| Total Underallocated (USD MM) | $28,860 |
| Most Active Public Plans by Number of Commitments |
L3M |
| Strathclyde | 3 |
| Washington State (WSIB) | 3 |
| Los Angeles County ERA (LACERA) | 3 |
| Most Active Public Plans by Commitment Amount (USD MM) |
L3M |
| Washington State (WSIB) | $835 |
| Oregon PERS | $400 |
| Los Angeles County ERA (LACERA) | $355 |
| Consultants Providing Most Recommendations |
L3M |
| Townsend Group (acquired by Aon) | 3 |
| Stepstone / Cambridge Associates | 2 / 2 |
| Aksia / Hamilton Lane | 2 / 2 |
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