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Investors plan to maintain private equity investment pace in the next 12 months

by Joe Childs

  • 04 Aug 2009
  • PE

With a significant proportion of its assets allocated to private equity, Yale University Endowment has revealed that it intends to maintain its overall investment strategy, despite suffering overall losses of around 30% during the last year. The $16 billion endowment, which suffered a $7 billion decrease in the value of its assets between June 2008 and June 2009, increased its private equity target allocation from 19% to 21% of total assets in 2008. This was primarily due to the strong returns generated by its private equity investments over the past decade – the endowment calculated that its investment portfolio would have returned $11 billion less if it had committed more heavily to stocks and bonds during the last 10 years.

Other investors share Yale’s belief in private equity’s ability to offer diversity and long-term returns. School Employees' Retirement System of Ohio, for example, plans to make commitments to private equity funds of $150-250 million in the next year, having allocated nearly $200 million to the asset class between July 2008 and June 2009. While the $8.1 billion retirement system tends to focus on domestic buyout funds, it will also seek international vehicles and special situations, distressed debt and co-investment opportunities in the next 12 months.

Chuo Mitsui Trust and Banking Company has indicated that it expects its exposure to private equity to increase in the future. The Japanese investor plans to expand its portfolio by committing up to $100 million to 3-4 private equity funds over the next 12 months. It prefers to commit to mezzanine, buyout and fund of funds vehicles with a focus on Japan, North America, Europe and Asia. While the firm does not tend to consider private equity funds investing in MENA or Russia, it is generally open to vehicles targeting opportunities in emerging markets.

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