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North American Public Pension Funds’ Private Equity Investment Plans for 2013 – January 2013

by Emma Underwood

  • 22 Jan 2013
  • PE

North American public pension funds continue to provide a valuable pool of capital to the private equity industry. Preqin's Investor Intelligence database currently tracks 1723 investors actively looking to make new fund commitments, of which 149 are North American public pension funds. It is reassuring for managers raising funds in 2013 to know that of these pension funds, 70% anticipate making new commitments to the asset class over the coming year.

Concerning North American public pension funds’ geographic preferences for investment over the next 12 months, the majority of investors are looking to invest in North America-focused funds (56.7%), followed by funds including Europe (41.3%) emerging markets (37.5%) and Rest of World (14.4%) within their remit.

Similarly, it is helpful to know the fund type preferences of North American public pension funds over the next 12 months. Buyout vehicles remain the preferred fund type of this group of investors, with 52.9% expecting to commit capital to such vehicles. Thirty-nine percent will consider distressed private equity, while 42.3% and 31.7% will consider investing in venture capital and growth funds respectively. Timber and natural resources vehicles are the fund type preference for 21.2% of North American public pension funds.

A North American public pension fund which expects to make new commitments in 2013 is San Bernardino County Employees’ Retirement Association. The $6.4bn public pension fund has planned commitments of $125mn over the next 12 months. It will spread those commitments across a range of geographies, allocating between $20mn and $50mn to distressed private equity, mezzanine, buyout and secondaries funds. It will also commit between $40mn and $80mn to a diversified fund of funds vehicle.

Another such public pension fund is Seattle City Employees’ Retirement System, which expects to commit between $25mn and $30mn to private equity in 2013, targeting a variety of strategies.

South Carolina Retirement Systems (SCRS) is also continuing to deploy capital to the asset class in 2013. In order to diversify its private equity portfolio by geography and strategy, SCRS will make commitments to third-party funds, including mezzanine, buyout, venture and distressed private equity vehicles, as well as investing in direct funds with specific strategies.

Overall, North American public pension funds maintain a positive outlook of the private equity asset class and the pool of capital they bring to the industry remains significant.

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