The Pandemic Hasn’t Kept Pensions From Hiring Private Equity Managers

Pension funds allocated more money to private equity in the second and third quarters than the same periods last year, according to eVestment.

Mark Abramson/Bloomberg

Mark Abramson/Bloomberg

The inability to meet with asset managers in person has not kept public pension funds from investing in private equity, according to eVestment.

The investment data firm said in a private markets report that pension funds committed $20 billion to private equity in the third quarter, more than the $17.8 billion invested in the same period last year. The second quarter had been even busier, with commitments totaling nearly $25 billion.

In total, eVestment said 455 private equity commitments were made by public pensions from April through September, following the transition to all-remote work in March. This compares to 413 private equity commitments recorded in the same six months a year earlier.

“Despite the remote nature of fundraising today, public plans are continuing to execute on their commitment plans and deploy capital,” eVestment said in the report.

The California Public Employees’ Retirement System, New York State Teachers’ Retirement System, Washington State Investment Board, and State of Wisconsin Investment Board were the most active investors during the third quarter, according to eVestment.

The Wisconsin fund had the highest total number of private equity commitments, with 13 new investments, while CalPERS, the largest U.S. pension fund, invested the most amount of money in private equity in the third quarter, allocating $4.7 billion across 10 managers.

Both SWIB and CalPERS made commitments to CVC Credit Partners — with CVC Capital Partners being the “most popular destination” for private investments in September, according to eVestment. In addition to an $850 million allocation from CalPERS and €250 million (about $296 million) investment from SWIB, CVC Capital Partners also attracted new investments from the New York City Fire Department Pension Fund and State of Michigan Retirement Systems.

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After CVC, the next most popular managers were Francisco Partners and Stellex Capital Management, eVestment said.

The data firm also recorded higher levels of investment activity in private debt, with pension funds making 146 commitments totaling $14.4 billion during the second and third quarters, up from $9.3 billion allocated across 95 commitments during the same six-month stretch of 2019.

However, allocations to real estate and real assets have slowed, with year-to-date real estate allocations down 26 percent compared to 2019. Real assets funds, meanwhile, have garnered $8.6 billion so far this year — a “far cry from the $19.1 billion reported through three quarters in 2019,” eVestment said. “It may be that the global economic slowdown resulting from the pandemic is pushing investors away from real assets for the foreseeable future.”