New Jersey State Investment Council, which manages the investments of the USD 68 billion State of New Jersey public pension fund, is considering an increase in its alternative investments allocation limit. The move was proposed in a meeting of council members on the 15th of July 2010 by its Chairman Orin Kramer, and a final decision will be taken on the proposal in September 2010. The proposal comes only eight months after then governor-elect, Chris Christie, had frozen the public pension fund’s alternative investment programme to prevent the deficit in the state’s budget from deepening. The alternative investments programme, has since resumed in 2010.
The public pension fund was underfunded in June 2009, with assets of the pension fund worth less that its promised payout to members, putting pressure on investment returns to alleviate this problem and increasing its allocation to alternative asset classes may be seen as a way to ease this problem. The maximum amount that can be invested in alternatives by the pension fund currently is 28% of its total assets, but the proposed change could see a rise in this limit to 36%. The move could also have an impact on the current 7% limit applied to the private equity asset class.
New Jersey State Investment Council currently has approximately 14.5% of its total assets invested in alternative asset classes and has a 5.4% current allocation to private equity, which is just shy of its 5.5% target to the asset class. The pension fund typically invests in a variety of fund types including buyout, mezzanine and distressed debt funds, whilst also gaining exposure to venture capital funds and new managers through fund of funds investments. The pension fund makes most of its private equity investments with a focus on North America, but does have some exposure to Asia and Europe.
More information on private equity investors can be obtained through Preqin’s online database Investor Intelligence