US-Based Pension Funds Make New Commitments to Private Equity - August 2012

by Francesca Braganza

  • 14 Aug 2012
  • PE

Public pension funds have historically been large investors in private equity funds, and as of June 2011 represented 29% ($400bn) of aggregate capital invested in the asset class. Preqin currently tracks 498 public pension funds actively investing in the private equity asset class, 55% of which are based in the US.

One of these US-based pension funds is the Los Angeles City Employees’ Retirement System (LACERS), which has recently made new commitments. Hamilton Lane Advisers, the private equity advisor for the pension fund, authorized a commitment of $30mn to Advent Global Private Equity VII, the seventh global buyout vehicle from Advent International. The fund will focus on upper mid-market buyout opportunities primarily across Europe, but also in North America. LACERS has previously invested with Advent International, having made a commitment of $20mn to Advent Global Private Equity VI.

LACERS also made its debut commitment to a secondaries vehicle raised by Coller Capital, Coller International Partners VI. Secondaries funds are becoming an increasingly popular investment vehicle for investors, allowing LPs to hold a diverse portfolio of investments and to mitigate the J-curve effect. According to Preqin’s H2 2012 Investor Outlook: Private Equity report, 19% of LPs view secondaries funds favourably, compared to the 14% of LPs that shared this view in H2 2011.

Another example of a US-based public pension fund recently making new commitments to private equity is Texas County & District Retirement System (TCDRS). The pension fund recently made a commitment of $75mn to Carlyle Partners VI, the sixth buyout offering from Carlyle Group. The fund will target buyout opportunities in North America, with a focus on a wide range of industries.

These recent commitments demonstrate that US-based public pension funds maintain an interest in private equity, while other investor groups may be more cautious given the current economic climate. Although buyout funds appear to be the most popular investment strategy among this investor group at present, many are still looking to maintain a diversified portfolio of investments going forward.

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