Wisconsin concentrates on debt, credit with Q4 commitments

State of Wisconsin Investment Board in the fourth quarter committed almost $300 million across seven private equity funds and co-investments, concentrating more than half those commitments in debt-related strategies.

Wisconsin committed $100 million to Benefit Street Partners’ fourth flagship fund, which is targeting $1.75 billion to invest in as many as 200 companies, an investor memo prepared by Hamilton Lane last year shows.

Benefit Street, Providence Equity Partners’ credit affiliate, was netting a 9.1 percent internal rate of return on its previous flagship fund, according to the memo. That fund raised $1.75 billion in 2014.

Wisconsin also allocated $50 million to Apollo European Principal Finance III, an Apollo Global Management fund reportedly seeking $3.5 billion for investments in debt being unloaded by banks and asset managers. The fund held a first close on $2.6 billion during Q4, Apollo co-founder Joshua Harris said in a recent earnings call.

The retirement system’s focus on European assets extended to lower-mid-market buyouts as well, pension documents say. Wisconsin committed $28 million to Procuritas Capital Investors VI, a Nordic-focused fund targeting $339 million, according to the firm’s website and an SEC filing.

Wisconsin also committed $50 million to Vista Equity Partners’ sixth flagship fund, which is seeking up to $10.5 billion, and $45 million to Warburg Pincus’s debut China-focused fund.

Wisconsin’s Q4 commitments also include a pair of $10 million co-investments in undisclosed portfolio companies, according to the report. Wisconsin’s co-investment program had grown to $207 million of market value as of year end, according to pension documents.

The retirement system plans to commit at least $50 million across three new co-investments that will close early this year, pension documents say. “The 2017 pipeline continues to be robust,” staff wrote.

Spokeswoman Vicki Hearing declined to comment on the pension’s co-investments.

Wisconsin’s PE portfolio was valued at $7.5 billion as of Dec. 31. The portfolio accounts for 8.4 percent of the retirement system’s overall investment exposure.

Action Item: For more information about Wisconsin’s portfolio, visit www.swib.state.wi.us

Green Bay Packers wide receiver Randall Cobb celebrates a touchdown against the Washington Redskins during the first half of their NFL football game in Green Bay, Wisconsin, on  Sept. 15, 2013.  Photo courtesy Reuters/Darren Hauck