We are seeing growing signs of pushback from investors as they contend with a slowing stream of distributions and portfolios that are over-allocated to private equity.

Two occurrences this week show LPs are more willing to say no to GPs.

Missed target

First up, a well-established venture firm with a solid track record fell short of its target for its latest fund. OpenView Venture Partners closed on $570 million for its Fund VII, well short of its $800 million goal.

To be fair, it was aiming much higher than it did for its previous fund, which raised $450 million. But there is no denying that there just wasn’t enough LP appetite for a much larger fund.

As we noted in our Thursday story, at least two pensions that invested in OpenView’s Fund VI reduced their commitments for Fund VII. Texas County and District Retirement System committed $30 million to Fund VII, which was $20 million less than it put into Fund VI, while Florida Retirement System Trust Fund committed $20 million, or $10 million less than its Fund VI commitment.

The cutbacks mirror those by other retirement systems. Pensions that have reduced their PE commitment pace this year (or have said they are considering reductions) include Kansas Public Employees’ Retirement System, Los Angeles City Employees’ Retirement System, Maryland State Retirement and Pension System, Pennsylvania State Employees’ Retirement System, Sacramento County Employees’ Retirement System and Ventura County Employees’ Retirement Association.

No extension

The pressure that pensions are feeling boiled over at this week’s investment committee meeting for the Marin County Employees’ Retirement Association. In a surprise move, the committee voted against a recommendation to approve a two-year extension for Abbott Capital Private Equity Fund VI, a $1.02 billion fund of funds launched in 2008, affiliate title Buyouts reported.

These sorts of fund extensions are usually approved by LPs without question, but it appears that Marin County doesn’t want to have to wait for the remaining value of its Fund VI stake. The fund has performed well, generating $154 million in distributions against Marin County’s $100 million commitment, and the investor’s remaining stake had a net asset value of $41 million as of September 30, 2022, according to the document.

The problem for Marin is that the fund still has about 400 unrealized portfolio companies, according to one of the investment committee members. It appears the committee would rather see Abbott liquidate the remainder of the fund than keep waiting around for exits, especially when there is no visibility about when the exit market will return in a meaningful way.

Marin County’s ‘no’ vote is all the more striking considering the CIO of another Fund VI investor said, “There is material value in the unrealized assets, and… liquidating in this market will materially reduce the realized value of those assets.”

It seems it is more important to Marin County to get an actual distribution now than wait for what would likely be a larger amount down the road.

Take heed if you plan to fundraise this year.