New Jersey State Investment Council, the policy-setting body for the investments of the state of New Jersey’s public pension fund assets - worth a total of USD 68 billion - has voted to draft new regulations that could see the alternative investments limit rise to 38% of total assets.
The current limit is 28% of total assets with a 7% ceiling applied to the private equity asset class. The move follows a proposal to increase the limit, which was put forward by former chairman Orin Kramer in a July meeting of council members. The council also heard from its investment consultant, Strategic Investment Solutions, which recommended raising the limit to as high as 43%, noting that the fund stood to gain an additional 30 to 50 basis points on its investments annually from an increase in the allocation limit to alternatives, before voting to draft regulations based on the 38% figure. A vote will take place in the next meeting of members, scheduled for October 2010, on whether to implement the new regulation.
New Jersey State Investment Council froze investments in alternatives in 2009 as part of a host of measures enforced by governor-elect Chris Christie to prevent further deepening the state budget deficit at the time.
New Jersey State Investment Council currently has approximately 14.9% of its total assets invested in alternative asset classes and has a 5.8% current allocation to private equity. The pension fund typically invests in a variety of fund types including buyout, mezzanine and distressed debt funds, while 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 in funds with a focus on North America, but does have some exposure to Asia and Europe.
More information on institutional investors in private equity can be found on Preqin’s Investor Intelligence database.