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Washington State Bets $550 Million On Global PE

It must be international month in the Washington State Investment Board cafeteria. At its November board meeting, the $79 billion pension system made more than $550 million in commitments to two global private equity managers, including $300 million for London-based Apax Partners and its Apax Europe VIII LP, and $250 million for Actis’s latest emerging markets offering, Actis Global 4 LP.

Washington State has one of the nation’s largest private equity programs, with $15.6 billion in existing private equity assets. Private equity represents about 25 percent of its main fund’s total assets.

The target for Apax Europe VIII is €9 billion ($12 billion), making it one of the largest private equity funds currently seeking capital.

Washington State has had a longstanding relationship with Apax, with which it has invested in three previous funds. The most recent of these, the 2006 vintage Apax Europe VII LP, received a $162 million commitment from Washington. That investment has garnered a 1.2x multiple and an 8 percent IRR. The previous fund, the 2000 vintage Apax Europe V LP, has performed superbly for Washington. That fund, to which Washington State committed $140 million, has had a 2.1x return multiple and a 37 percent IRR. Finally, the system invested $169 million in the 1999 vintage Apax Europe IV LP. That fund has had a 1.3x return multiple and a 7 percent IRR.

Bolstering its allocation to emerging markets private equity, Washington State has begun a new relationship with Actis. The emerging markets specialist, which invests exclusively in Africa, Asia and Latin America, is seeking $3.5 billion for its Actis Global 4 Fund. Other investors in Fund 4 include the Pennsylvania School Employees’ Retirement System, which has committed $100 million, and the San Francisco Employees’ Retirement System, which committed an undisclosed amount.

Actis’s previous fund closed in 2008 having raised $2.9 billion. The firm has offices in Beijing, Cairo, Delhi, Johannesburg, Lagos, Mumbai, Nairobi, Sao Paulo and Singapore.

Washington State is known for making large commitments. Since early this year, the system has committed $300 million to Leonard Green & Partners’ latest fund, $300 million to the latest fund from Providence Equity Partners, and $500 million to the latest mega-fund from Kohlberg Kravis Roberts.

Separately, Washington State committed an additional $4 million to the Southern Cross Latin America Fund IV LP, to which it initially committed $75 million in September 2010.