New York City weighs options with nascent co-investment platform

New York City’s Bureau of Asset Management is considering several options as it plots a move into private equity co-investments, Senior Investment Officer J. David Enriquez said.

Enriquez, speaking during a fireside chat on Jan. 19 at Buyouts Insider’s Emerging Manager Connect conference in New York City, said the city’s $191.2 billion pension system is plotting how to best invest in private companies alongside their private equity managers.

Enriquez joined New York City’s Bureau of Asset Management, a division of the city comptroller’s office, in 2016 after a lengthy career as an investment banker for Rothschild & Co and Merrill Lynch. Since joining the bureau’s investment team, Enriquez was tasked with studying different co-investment approaches and the best ways they could be implemented at the city’s five public pensions.

While New York City has some exposure to co-investments through commingled sidecar funds, the city’s retirement has yet to build exposure to direct deals, Enriquez said.

“We’re still at that stage of looking at the market, understanding the structures and approaches other LPs have taken and figuring out what would work for New York City,” he said, describing the $11.3 billion private equity program. “Co-investment is sort of the logical next strategy.”

The public pension system is considering several options in constructing its co-investment program. Several options are on the table, Enriquez told Buyouts after his remarks. They could bring a co-investment team in-house, much like at State of Wisconsin Investment Board, or hire an outside firm with discretionary power.

However New York City ultimately approaches co-investments, Enriquez said the team is concentrating on developing a platform that can close deals speedily and with certainty, two traits that are lacking at other institutions.

That said, the hope is that the size and maturity of New York City’s PE portfolio could quickly put it in the same league as other limited partners with advanced programs, such as Wisconsin or Canadian Pension Plan Investment Board, Enriquez said. Both institutions firmly established co-investing or direct investing arms.

“We think about a co-investment program as an opportunity to drive better returns — period,” he said. “That’s the way we approached our study and that’s how we think about it internally.”

In aggregate, New York City’s five public pensions held roughly 6 percent of their assets in private equity as of October.

Action Item: For more on New York City’s pensions, visit comptroller.nyc.gov

J. David Enriquez of New York City’s Bureau of Asset Management discusses co-investments with Buyouts Insider Executive Editor David Toll at Emerging Manager Connect on Jan. 19, 2017 in New York City. Photo by Buyouts Staff.