New Jersey Investment Council ups private equity asset range

New Jersey State Investment Council increased its private equity asset class range Wednesday to 9-to-15 percent of its total allocation from 4-to-12 percent before.

“The ranges give the Division of Investment the necessary flexibility to take advantage of short-term opportunities as they arise,” spokesman William Skaggs told Buyouts in an email.

The range hike comes two months after the council decided to lift its private equity target to 12 percent. As sister publication Private Equity International reported in June, that came after months of uncertainty over what role private equity would play in the fund, valued at just over $76 billion as of May 31.

Democratic Governor Phil Murphy campaigned on stopping the state pension funds from investing in private equity, Buyouts previously reported.

“These investments have cost us hundreds of millions in fees while delivering only middling results,” his campaign website said.

After Murphy took office in January 2018, Buyouts reported the system halted private equity investing. But, when an opportunity arose to invest in Vista Equity Partners Fund VII, the private equity staff recommended a $300 million commitment and got no push back from Murphy’s office, Buyouts previously reported.

“I always took Murphy’s comments as populist rhetoric that he used in the campaign,” former State Investment Council chairman Thomas Byrne told PEI in June.

According to the latest report, the fund’s current buyouts and venture capital allocation sits at 9.99 percent as of May 31.

The hike in private equity allocations came at the same time the pension slashed its hedge fund allocation in half, from 6 percent to 3 percent. At Wednesday’s meeting, Council also decided to slash that asset class range to 1-6 percent from 0-10 percent.

The state’s pension funds are facing a crunch. The Teachers’ Pension and Annuity Fund is 59.3 percent funded, the Public Employees’ Retirement System is 59.8 percent funded and the Police and Fireman’s Retirement System is 69.5 percent funded, according to NJ.com, and Murphy is embroiled in a battle with Republicans over their future.

Action Item: read the most recent public investment reporting package from April here.