US pension fund California State Teachers’ Retirement System (CalSTRS) committed a total of $2.2 billion to private equity managers in the second half of last year ended 30 September, bringing its total for 2019 to $7.6 billion.
According to its latest private equity investment report, the second half commitment included the $1.6 billion approved during the fourth quarter, increasing its exposure to PE to 9.5 per cent from 9.3 per cent in March last year.
The pension fund’s overall PE program is slightly above the current target of 9 per cent but still below the long-term target exposure of 13 per cent.
“Private equity remains, and is expected to remain, an important return driver for CalSTRS,” the pension fund said. The PE program experienced net contributions of $500 million combined over the last two quarters of 2019.
The pension fund said its PE program has regularly committed across several vehicles offered by the managers mentioned, including select co-investments. In several cases, the commitments are managed by separate teams with the manager and executive on different strategies.
The semi-annual performance report also showed that that the pension fund continues to commit across several vehicles offered by its largest managers – Blackstone Group, which accounts for the pension fund’s 11.6 per cent exposure, Carlyle Group (4.3 per cent), Permira (3.8 per cent), TPG Capital (3.8 per cent), and Summit Partners (2.9 per cent).
Specifically, from June to September 30, CalSTRS’s PE program approved capital commitments to Advent Global Technology Fund, Apax X, Francisco Partners Credit I, AlpInvest SSMA, TA Select Opportunities, Cortex VII, RRJ IV, ICG Strategy Equity, Blackstone Life Sciences V, and MBK Partners V, the fifth buyout fund of North Asia-focused private equity firm MBK Partners.
MBK Partners is targeting as much as $6 billion for the fifth buyout fund, with plans to reach the final close by the second half of this year. The predecessor fund, launched in 2016, closed with $4.1 billion in commitments. CalSTRS committed $200 million to the fund.
The CalSTRS reported also showed that about three-quarters of commitments completed in the second half were made in buyouts, including US/North America, global, and Asia-focused strategies, the fund said.
CalSTRS began investing in the PE asset class in 1998. As of September 30, it had 458 investments in the active portfolio and 163 investments in the exited portfolio. The total value of the portfolio was $22.9 billion, with total exposure, including unfunded commitments, of 42.5 billion.