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US public pension funds - providing capital for private equity funds

by Kevin Neadley

  • 11 May 2011
  • PE

US public pension funds are some of the largest private equity investors in the world and represent a key source of capital to the industry. Preqin’s data shows that 64 of these institutions have made one or more capital commitments to 2011 vintage private equity vehicles.

Some of the most active investors in this year’s vintage funds include Los Angeles Fire and Police Pension System (LAFPP), Arkansas Teacher Retirement System (ATRS), and Oregon State Treasury (OST).

Los Angeles Fire and Police Pension System has made commitments to five vintage 2011 funds, with one of these being a USD 20 million capital commitment to InSight Venture Partners VII, which focuses on growing software and technology companies. Just last year, LAFPP’s board approved a recommendation from Portfolio Advisors to invest USD 900 million over the next three years in up to 51 private equity funds. Half of this is earmarked for buyout funds, with the remaining half to be split between venture and special situation funds. The pension fund is likely to form new relationships with managers to achieve its investment targets. LAFPP typically commits USD 15-25 million to each new fund.

Arkansas Teacher Retirement System is another recently active investor, with it committing capital to four new private equity funds. These include a mezzanine vehicle, two funds of funds and the buyout fund, Wicks Capital Partners IV, which ATRS committed USD 40 million to.

Oregon State Treasury has made some significant commitments to funds commencing investments this year. It pledged USD 525 million to KKR’s latest buyout fund, KKR North American XI Fund, and USD 200 million to Blackstone Capital Partners VI. It has also committed USD 5 million to the growth fund, Voyager Capital IV, as well as to a secondaries fund that bids for LP stakes in funds of funds, secondary funds, and older venture capital funds.

Preqin’s Investor Intelligence product allows users to search for LPs by their previous private equity investments. The feature enables users to identify investors based on a range of fund criteria, including vintage year, industry focus, location of GP, fund type and size. Alternatively, investors can be found through the specification of individual fund manager and fund names.

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