The New York State Teachers’ Retirement System (NYSTRS), one of the largest public pension funds in the US, has approved a capital commitment of up to $200 million to the second China-focused fund of private equity firm DCP Capital.
The pension fund’s executive director approved the commitment to DCP Capital Partners II, which focuses on companies headquartered in Greater China, in May this year, NYSTRS disclosed during its latest investment committee meeting.
DCP Capital Partners II targets small to mid-cap buyout and substantial minority investments in consumer, healthcare, agriculture, financial, and business services companies. The PE firm’s debut US dollar and RMB funds raised about $2.5 billion in total in April last year.
The firm’s investors include Singapore sovereign wealth fund GIC Pte Ltd and state investor Temasek Holdings Pte Ltd, as well as Canadian public pension fund Caisse de depot et placement du Quebec (CDPQ), according to a Reuters report.
DCP Capital, which was co-founded by former KKR & Co Greater China head David Liu, is an investor in Ping An Insurance, dairy producer Mengniu Dairy, household appliance brand Qingdao Haier, investment bank CICC, alkaline battery manufacturer Nanfu Battery, pork meat producer COFCO Meat Holdings, and raw milk supplier Modern Dairy, among others.
In a Reuters interview in June, Liu, the founding partner of DCP Capital, said the best time to ink take-private deals would be after a big crisis, saying such an environment provides more attractive valuations.
The commitment to DCP Capital Partners II was part of the $1.75 billion in total commitments that the New York pension fund made between April 1 and June 30 this year to private equity firms. The allocations also included a $300-million commitment to Silver Lake Partners VI, the latest buyout fund of Alibaba Group and Ant Group investor Silver Lake.
Overall, NYSTRS’s private equity program had $22.6 billion in active commitments, approximately $8.8 billion in adjusted market value, and $7.2 billion in unfunded commitments as of June 30, 2020.
From its inception through March 31, 2020, the pension fund’s PE portfolio returned a net IRR of 12 per cent and a net multiple of 1.56x invested capital. For the fiscal year ended June 30, NYSTRS said its PE portfolio was $253.3 million cash flow positive.
NYSTRS is the second-largest public retirement system in the state and one of the 10 largest public pension funds in the US.
In January, the pension fund had approved a commitment of $150 million to MBK Partners Fund V, the fifth buyout fund of North Asia-focused private equity firm MBK Partners. The fund focuses on control investments within the telecom/media, financial services, consumer, and retail sectors in Korea, Japan, and Greater China.