The $18.5 billion state-funded insurance company has opted to extend its contract with its current investment consultant, Mercer Investment Consulting, for a further year. In February 2008, Mercer Investment Consulting was hired by OBWC to advise on the board’s investment activity, replacing its then investment consultant, Wilshire Associates.
As of February 2010, OBWC was considering making new investments in the private equity asset class at some stage in 2010. OBWC was once an active investor in private equity and had made over 60 fund investments. However, in 2006, OBWC shifted its investment strategy and sold all of its private equity fund interests between mid-2007 and Q4 2008, having awarded UBS a mandate to advise on the sale of its portfolio of private equity investments on the secondary market. The portfolio consisted of 35 venture funds, 20 buyout funds, 8 funds of funds and 5 mezzanine funds. While it was not certain that OBWC would resume investing in private equity funds, it anticipated that if it were to re-enter the asset class, the development of its portfolio would take a different path to the strategy previously employed. It expects that any future foray would consist of fewer different fund investments, but with larger commitments to each fund, with funds of funds a possible method of ensuring diversity within its private equity portfolio.
As of Q1 2010, OBWC had hoped to commence making commitments to new private equity funds in Q2 2010. At this time it was in the final stages of developing its private equity strategy alongside Mercer Investment Consulting. OBWC could invest approximately $400 million in the asset class initially, with commitment sizes falling in the range of $25-50 million. This would be in contrast to its past private equity activity, which predominantly saw commitments of $5-25 million.
Mercer is a provider of investment consulting services, offering customised guidance at every stage of the investment decision, risk management and investment monitoring process. The firm has over 2700 clients located in the US, Europe, Australia, Canada and Asia, including 300 full service retainer clients in the US. Its clients include retirement systems, foundations and endowments, financial institutions, insurance companies and other institutional investors. Mercer tends to advise its private equity investor clients via the fund of funds route. It looks to diversify its clients’ private equity portfolios across vintage year, geography and industry type.
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