Pension System: New York City Retirement Systems
Assets Managed: $127 Billion (Nov. 2012)
Private Equity Assets Managed: $8.7 Billion
Private Equity Allocation / Target: 6.9% / 6.5%
Chief Investment Officer: Lawrence Schloss
The biggest commitment was for $400 million to the newest secondary fund from Landmark Partners, Landmark Equity XV LP, a fund with a $2.5 billion target. Part of the city’s investment includes a side car, Landmark Equity XV Side Car LP.
Founded in 1989, Simsbury, Conn.-based Landmark Partners has made a number of innovative investments of late. Last year, the firm invested in a 12-year-old fund from Willis Stein & Partners, with the fresh capital intended to provide the fund’s original investors a way out. Landmark Partners’s previous fund, Landmark Equity Partners XIV LP, raised $2 billion in 2008.
New York City also made a monster $330 million commitment to the latest flagship fund from the Carlyle Group, Carlyle Partners VI LP. The commitment also includes a sidecar fund, Carlyle Partners VI Side Car LP.
The Carlyle Group, which went public in 2012, has targeted $10 billion for its latest mega-fund, which it started raising money that same year. So far, the fund has gathered an impressive array of limited partners, including the Illinois Teachers’ Retirement System, which committed $250 million, the Florida State Board of Administration, which pledged $200 million, the Michigan Retirement Systems, which committed $175 million, the Texas County & District Retirement System, which pledged $75 million, and the New Mexico Public Employees Retirement System, which committed $40 million.
Carlyle Group’s previous flagship fund, the vintage 2007 Fund V, raised $13.7 billion. That fund, which invested in Dunkin’ Donuts, AMC Entertainment and The Nielsen Company, has generated a 9.5 percent net IRR and a 1.3x net return multiple, according to September 2012 return data from the California Public Employees’ Retirement System, which committed $800 million to the fund.
Beverly Hills-based turnaround specialist Platinum Equity also drew a huge commitment from New York City, receiving $305 million for its latest fund, Platinum Equity III LP. The fund has a $3.75 billion target. Platinum Equity is headed by Tom Gores, a buyout specialist who is also known for owning the Detroit Pistons basketball team.
Other pensions to invest in Platinum Equity’s latest fund include the Florida State Board of Administration and the Pennsylvania Public School Employees’ Retirement System, each of which pledged $200 million, the Louisiana Teachers’ Retirement System and the New Mexico State Investment Council, which both pledged $50 million, the Los Angeles City Employees Retirement System, which committed $25 million, and the Kansas Public Employees’ Retirement System, which pledged $20 million.
According to June 2012 data from Pennsylvania PSERS, Platinum Equity’s previous fund, the vintage 2007 Fund II, has garnered a 14 percent IRR and a 1.4x return multiple. Pennsylvania PSERS committed $300 million to the fund.
New York City pledged $60 million to the latest co-investment fund from Neuberger Berman. The fund, Neuberger Berman Strategic Co-Investment Partners Fund II LP, closed earlier this year with $1.1 in commitments.
Finally, New York City committed $21 million to ACON Equity III LP through its emerging managers program. The fund has a $600 million target.
ACON has a hybrid strategy, investing in small to mid-sized energy companies as well as companies that serve the U.S. Hispanic population. Other pensions that have invested in the firm’s latest fund include the New York State Common Retirement Fund, which pledged $120 million, the California State Teachers’ Retirement System, which committed $70 million, the Massachusetts Pension Reserves Investment Management Board, which committed $50 million, and the Los Angeles Fire and Police Pension System, which committed $10 million.
As of November 2012, New York City’s five municipal pensions had $8.7 billion invested in private equity, about 6.9 percent of their overall assets. The commitments were made from four of the five: the New York City Employees’ Retirement System, the Teachers’ Retirement System of the City of New York, the New York City Police Pension Fund, and the New York City Fire Department Pension Fund. Only the New York City Board of Education Retirement System, the smallest of the five, refrains from investing in private equity.