LP Briefs, May 2010

Oregon Backs OrbiMed, 3 Other Funds

The Oregon Investment Council, which manages some $68 billion in assets, has committed $340 million to four private equity funds this year, including the latest fund from New York-based life sciences venture firm OrbiMed Advisors.

Oregon Investment Council’s actual allocation to private equity is 19%, which is above its 16% target.

Oregon committed $40 million to OrbiMed’s Caduceus Private Investments IV, which has a target of $550 million. The firm invests primarily in biopharmaceutical and medical device companies in North America and Europe.

Oregon also made three pledges of $100 million to three other firms: Avista Capital Partners, which recently closed with $1.8 billion to invest in the energy, health care and media industries; U.K.-based Lion Capital’s Lion Capital Fund III, which has a target of $2.7 billion and plans to invest in U.K.-based consumer-related businesses; and New York-based Veritas Capital’s Veritas Capital Fund IV, which is seeking up to $1.25 billion to invest in mid-market companies that provide goods and services to government-related customers. —Nancy GordonOver-Allocated Penn SERS Keeps Committing

The Pennsylvania State Employees’ Retirement System recently pledged $40 million to two private equity firms for follow-on investments, even though the pension fund is still above its PE target allocation.

The limited partner committed up to $25 million to J.H. Whitney VII and up to $15 million to Advent Latin America Private Equity Fund V.

J.H. Whitney invests mainly in small and mid-market buyouts and recapitalizations of growth-oriented U.S. companies in the consumer products, specialty retail, health care services, specialty manufacturing and business services sectors. Penn SERS previously committed to J.H. Whitney Funds III through VI.

Advent International’s Latin American fund is a $2 billion-targeted pool that will take control stakes in mid-market businesses, mainly in Mexico, Brazil and Argentina. The state pension fund committed up to $30 million to the firm’s fourth Latin American fund, which closed in 2007 with $1.3 billion.

In January, Penn SERS’ Nicholas Maiale said in a statement that the board intends to maintain core relationships with top-tier alternative investment managers “on a highly selective basis,” even as the LP gradually reduces its exposure to alternative investments.

The $24 billion pension fund reduced its private equity target allocation from 14% to 12% last year. However, Its actual allocation stood at more than 23%, as of Dec. 31, according to a spokesperson. —Nancy Gordon

Tennessee Pledges to Oaktree Capital

The $29 billion Tennessee Consolidated Retirement System recently approved a $50 million commitment to Oaktree PPIP Private Fund, which is earmarked for investments in mortgage-backed securities. As of January, Oaktree Capital had raised $425.8 million from Tennessee and 38 others investors to invest in mortgage-backed securities through the government’s public-private investment program (PPIP) plan.

The pledge represents the fifth private equity commitment for Tennessee, which obtained legislative approval to invest in the asset class in 2008 and made its first pledge last year. Previous pledges went to a mix of venture capital and buyout funds managed by Draper Fisher Jurvetson, Hellman & Friedman, Khosla Ventures and TA Associates.

The addition of the new pledge brings the LP’s private equity portfolio to $225 million, or less than 1% of total assets. Tennessee’s target allocation to private equity is 3%, with an upper limit of 5 percent. —Nancy Gordon

N.C. Taps Credit Suisse to Run $230M Fund

The North Carolina Retirement System has tapped Credit Suisse to manage the North Carolina Innovation Fund, which is earmarked for investments in businesses with significant operations in the state.

The $230 million fund will target high-growth industries, which could include life sciences, technology and cleantech. The capital will be invested over three to five years and can go to direct investments, co-investments and funds of funds.

The fund was expected to be formally rolled out in late April and early May.

North Carolina has a target allocation to alternative assets, including private equity and hedge funds, of 4.5 percent. Its actual allocation stood at 5.4%, as of Aug. 31, 2009.

North Carolina is one of only three states that uses a sole fiduciary to oversee its pension fund. The others are New York and Connecticut. —Nancy GordonOntario Teachers’ Returns Rebound

The Ontario Teachers’ Pension Plan, one of Canada’s top investors, announced last month that the value of its investments bounced back in 2009 after major losses a year earlier.

In 2008, Ontario Teachers’ suffered an 18% investment loss as equity and other holdings were slammed by the global financial crisis. Ontario Teachers’ said it had an annual rate of return of 13% last year as confidence returned to financial markets, and reported $10.8 billion in investment earnings.

“We spent 2009 taking care of the business of the plan during the tail end of the financial market crash, while making some investments that are already starting to pay off, and fortifying the plan for the future,” said CEO Jim Leech.

Leech said that the rebound last year came as confidence returned to markets, but he added that it did not reflect true economic growth.

“We should not expect this kind of market growth going forward,” he said. “In 2008 and continuing into the first quarter of 2009, we saw a crisis of confidence among investors. It caused market mayhem.”

He added that the pension system expects it will still be some time until true economic growth takes hold. —Pav Jordan, ReutersUniversity of Michigan Pledges to SAIF

The University of Michigan recently pledged $10 million to the fourth fund of Hong Kong-based SAIF Partners, even as the university’s allocation to private equity exceeded its target.

The University of Michigan had allocated 15.5% of its assets to private equity as of February, ahead of its 12% target, according to a spokesperson.

SAIF invests $10 million to $100 million in growth equity opportunities and buyouts in Greater China and India. The New York State Common Retirement Fund and the California Public Employees’ Retirement System recently committed $100 million and $120 million to SAIF Partners IV, respectively. —Nancy GordonNM Names Another Interim Investment Chief

The New Mexico State Investment Council, which has been in turmoil since the pension fund pay-to-play scandal in New York broke about a year ago, has a new interim state investment officer.

The state investment council named Steven Moise as interim state investment officer at its meeting in late March. Moise is currently on the New Mexico Board of Finance and has a long history in New Mexico’s business and legal communities. His appointment depends on the approval of the full council, which could come this month, a spokesperson said.

Meanwhile, Bob Jacksha has returned to his CIO position at the New Mexico Educational Retirement Board.

New Mexico Gov. Bill Richardson named Jacksha interim state investment officer in the fall, following the resignation of Gary Bland. Bland resigned in October after learning that the council intended to render a no-confidence vote against him.

Until April, the state investment council had used Dallas-based Aldus Equity Partners as its private equity consultant: Aldus founder Saul Meyer pleaded guilty in connection with the New York Common kickback scheme and is awaiting sentencing.

New Mexico manages assets of $13.4 billion. As of January, it had an actual private equity asset allocation of 9.9%, which is within its range of 6% to 12 percent. —Nancy Gordon