Slideshow: New Jersey’s Top-Performing Funds

The New Jersey State Investment Council, which faces a significant unfunded liability gap for the pension funds it manages, appears to be looking to alternative investments as one way to meet its obligations.

Earlier this year, according to peHUB sister magazine Buyouts, the state raised its allocation cap on alternative investments — including private equity, hedge funds, real estate and commodities — to a lofty 38 percent.

It’s not clear exactly how that will impact the council’s $5 billion in private equity investments, which represent approximately 6.8 percent of the $73 billion total asset pool. But the state’s recent decision to commit $600 million to three private equity funds suggests its allocation to the asset class is heading higher. A good idea?

Well, as of May 31 the state’s relatively new private equity portfolio (most commitments date from mid-2005 to late 2008) is off to a modestly good start. That’s especially true for a portfolio that ramped up heavily right before the financial crisis and that is still being victimized by the J-curve effect (in which high management fees sap returns in the early life of a limited partnership). Its best-performing category of private equity, not surprisingly, is distressed debt, generating a 1.26x total value multiple and representing 11.5% of its private equity commitments. That’s followed, in order of performance, by secondaries (1.18x, 3.2%); domestic mid-market buyout (1.14x, 21.9%), mezzanine debt (1.11x, 6.9%), large buyouts (1.09x, 20.9%), venture capital (1.07x, 2.3%), co-investments (1.05x, 5.7%), small/mid-sized buyouts (1.05x, 7.4%), emerging managers (.99x, 4.6%) and international (.99x, 15.5%).

Click through below to see the top 10 performing funds in the New Jersey State Investment Council’s 77-fund portfolio, five of which are distressed-debt funds and four of which share the same fund manager as at least one other fund in the top 10.

(Note: All data in the following slideshow are from the New Jersey State Investment Council.)

David M. Toll is editor-in-charge of Buyouts Magazine. Follow him @davidmtoll. Follow @Buyouts.

[slideshow]

[slide title=”No. 9 (Tied) – Avenue Special Situations IV”]

Total Value Multiple:1.37x

Inception Date: November 2005

Capital Committed: $20 million

Capital Contributed: $20 million

Total Value: $27.3 million

[slide title=”No. 9 (Tied) – Wayzata Opportunities Fund II LLC”]

Total Value Multiple:1.37x

inception Date: December 2007

Capital Committed: $100 million

Capital Contributed: $111 million

Total Value: $152.3 million

[slide title=”7 (Tied) – Warburg Pincus Private Equity IX LP”]

Total Value Multiple: 1.38x

Vintage: August 2005

Capital Committed: $200 million

Capital Contributed: $200 million

Total Value: $275.4 million

[slide title=”No. 7 (Tied) – KPS Special Situations Fund III LP”]

Total Value Multiple: 1.38x

Inception Date: May 2007

Capital Committed: $25 million

Capital Contributed: $11.7 million

Total Value: $16.1 million

[slide title=”No. 6 – Centerbridge Capital Partners LP”]

Total Value Multiple: 1.40x

Inception Date: June 2006

Capital Committed: $80 million

Capital Contributed: $115.7 million

Total Value: $161.7 million

[slide title=”No. 5 – Onex Partners II LP”]

Total Value Multiple: 1.42x

Inception Date: August 2006

Capital Committed: $100 million

Capital Contributed: $88.2 million

Total Value: $125.0 million

[slide title=”No. 4 – Wayzata Opportunities Fund LLC”]

Total Value Multiple: 1.49x

Inception Date: February 2006

Capital Committed: $40.0 million

Capital Contributed: $55.0 million

Total Value: $82.0 million

[slide title=”No. 3 – SONJ Private Opportunities Sidecar LP”]

Total Value Multiple: 1.52x

Inception Date: April 2008

Capital Committed: $200 million

Capital Contributed: $20.6 million

Total Value: $31.4 million

[slide title=”No. 2 – Vista Equity Partners Fund III LP”]

Total Value Multiple: 1.85x

Inception Date: July 2007

Capital Committed: $100 million

Capital Contributed: $78.2 million

Total Value: $144.3 million

[slide title=”No. 1 – Warburg Pincus Private Equity VIII”]

Total Value Multiple: 2.07x

Inception Date: June 2006

Capital Committed: $25.8 million

Capital Contributed: $26.9 million

Total Value: $55.6 million

[/slideshow]