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Wisconsin splits private-equity, VC allocations

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State of Wisconsin Investment Board, pension fund, private equity, limited partners
New York Giants fans, wearing blue cheese hats, sit in the stands before their game against the Green Bay Packers during their NFL NFC Divisional playoff football game in Green Bay, Wisconsin, January 15, 2012. REUTERS/Jeff Haynes.
  • Wisconsin counted VC as part of its private-equity allocation
  • VC allocation capped at 2 pct of core trust fund
  • Allocation will include in-state investments

The State of Wisconsin Investment Board will extract venture-capital investments from its private-equity portfolio and create a separate allocation to venture-related strategies, according to investment-board documents.

The Investment Board approved the proposal at its March 8-9 meeting. Wisconsin currently groups VC funds and co-investments within its private-equity allocation. The new venture-capital portfolio will include SWIB’s existing allocations to traditional VC funds as well as fund commitments and direct investments held through its in-state private-equity program.

The new venture-capital portfolio will be around $1.3 billion initially, according to Wisconsin spokeswoman Vicki Hearing.

SWIB capped its venture-capital allocation at 2 percent of its core trust fund, valued at $83 billion as of Jan. 31, and 25 percent or less of its $13 billion private-markets portfolio, which includes SWIB’s investments in real estate, private debt and private equity.

In addition to setting parameters around its venture-capital portfolio’s size, Wisconsin also established guidelines for the level of approval required for each commitment to a new manager, a re-up or a co-investment as part of the new portfolio, outlined in the attached SWIB chart.

Wisconsin valued its private-equity portfolio at $5.9 billion as of January 31, according to its March meeting materials. The portfolio generated a 10-year annualized return of 11.5 percent, clearing its benchmark by about 2 percentage points.

Action Item: For more information about Wisconsin’s venture-capital allocation, read SWIB’s March 8-9 meeting materials at http://bit.ly/22pVnOQ

Photo courtesy of Reuters