The US-based public pension fund committed almost USD 1 billion to private equity funds at the end of 2011, which saw its total commitments to the asset class for the year reach over USD 2 billion. It made a large commitment of around USD 750 million to Warburg Pincus’s latest fund offering, Warburg Pincus Private Equity XI, which is targeting USD 15 billion. It has previously committed to six Warburg Pincus funds.
WSIB also made a USD 200 million commitment to Denham Capital Management’s most recent natural resources fund, Denham Commodity Partners Fund VI, which is targeting USD 2.5 billion. Further commitments from Washington State Investment Board in 2011 include USD 250 million to Actis 4, a new partnership for the pension fund, as well as a re-up of EUR 222 million to Apax Europe VIII. WSIB has USD 15.6 billion allocated to the private equity asset class.
Another public pension fund to have made a commitment to Denham Commodity Partners Fund VI is Tennessee Consolidated Retirement System (TCRS), which committed USD 50 million to the fund. Other investments made by the pension fund in 2011 included a USD 25 million commitment to Bessemer Venture Partners VIII and an investment of USD 20 million to Berkshire Fund VIII. It also re-upped with Khosla Ventures, committing USD 25 million to Khosla Ventures IV.
The pension fund currently has total assets under management of USD 31.3 billion, with a target allocation for private equity of 3% of total assets. Eventually, TCRS aims to have 45% of its private equity portfolio invested with managers based outside of the US, and hopes to makes its first non-US private equity commitment in 2012 or early 2013.
Although the financial markets remained volatile during in the second half of 2011, the private equity asset class has continued to attract capital from investors. Preqin conducted interviews with over 100 prominent institutional investors from around the world in December 2011, and of those LPs interviewed, 66% had made commitments to the asset class over the course of 2011. Although 2012 looks set to be another challenging year, LPs are viewing the private equity asset class optimistically, with 74% of LPs interviewed intending to make new private equity commitments in 2012.