US pension fund commits $70m to Baring PE Asia’s eighth buyout fund

Hong Kong. Photo by RJ Joquico on Unsplash

The Maryland State Retirement and Pension System (MSRPS) has committed $70 million to Hong Kong-based Baring Private Equity Asia’s (BPEA) eighth buyout fund, according to the US pension fund’s recent investment committee meeting.

DealStreetAsia had earlier reported that BPEA was seeking to raise $8.5 billion for the Baring Private Equity Asia Fund VIII, which would be $2 billion larger than its predecessor fund, which held its final close in Jan 2020.

AVCJ reported last month that BPEA had already reached the initial target for the eighth vehicle with a second closing.

Other limited partners in the fund include the Canada Pension Plan Investment Board (CPPIB), which committed $600 million, the Employees Retirement System of Rhode Island (ERSRI), the Illinois Municipal Retirement Fund, the Louisiana State Employees’ Retirement System, the Employees Retirement System of Texas, and Yue Yuen Industrial, a subsidiary of Taiwan-listed footwear manufacturer Pou Chen Corporation.

BPEA’s eighth fund will allocate up to 10% of its capital to growth-stage investments, alongside traditional buyouts, according to ERSRI. The fund will write cheques between $150 million and $500 million and invest in 18-22 companies.

ERSRI also said that BPEA’s seven first funds had generated a combined net return of 1.64 times invested capital, a net IRR of 14.9%, and a net distribution to paid-in capital (DPI) of 0.64 times invested capital as of March 31, 2021. Its six most recent funds have generated a net IRR of 15.8% since 2002, outperforming the MSCI AC Asia Net (USD) Index by 6.8%.

Meanwhile, MSRPS, which had also committed $70 million to each of BPEA’s sixth and seventh buyout funds, said in its meeting document that Fund VI delivered an IRR of 20.1% since inception, DPI of 0.4x and total value to paid-in capital of 1.9x. The figures for Fund VII were 50.13%, 0.2x, and 1.7x, respectively.

The commitment to BPEA’s eighth vehicle was part of MSRPS’ $2 billion commitments to new funds in 2021, which include those managed by Chinese investment firm Orchid Asia, Bain Capital, TA Associates, Institutional Venture Partners, and Clearlake Capital Partners.

Private equity (PE) accounted for over $12.7 billion in the pension fund’s portfolio as of September 2021, or 18.6% of the total.

It has been the best performer among asset classes, generating a nearly 39% return year-to-date. Returns for the one-year, three-year and five-year periods were 54.3%, 23.7% and 21.7%, respectively.

MSRPS expects its PE returns will be “roughly 12%” for the first quarter of the fiscal year 2022. The pension fund has modelled a blended PE portfolio of 80% to buyout and 20% to venture capital. It added that the allocation target for PE would increase by 3%.

The $69.6 billion pension fund has backed other Asia-focused managers such as Navis Capital Partners, MBK Partners, PAG Asia, and GGV Capital.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.