New Jersey pension mulls secondaries programme

The New Jersey Division of Investment, which manages the state’s $63 billion pension scheme, is considering launching a dedicated investment programme targeting private equity secondaries.
The pension’s council held a discussion at its meeting last week about the possibility of hiring a secondaries manager, a spokesman for the pension said in an interview.

New Jersey has made some secondaries purchases in the past, the spokesman said, but does not have a dedicated programme. The pension also has committed capital to secondary funds, including last summer giving $100 million to Lehman Brothers Secondary Opportunities Fund II.

The pension continues to invest in alternatives despite the market downturn, allocating $85 million to private equity firms and real estate in May, according to the most recent investment report from the State Investment Council. Investments included $14 million to JLL Partners, $9 million to the Neuberger Berman NJ Fund and $7.3 million to the WLR Recovery Fund IV.

New Jersey had a 4.9 percent actual allocation to private equity in May, worth roughly $3.1 billion.
Some US public pensions have recently looked to the secondaries market to snag attractive private equity fund interests at discounts.

The Indiana Public Employees’ Retirement Fund spent about $11 million on secondaries purchases in June of fund interests from oil and gas-focused private equity firm EnCap Investments. The pension didn’t disclose from where it purchased the fund interests.
Also in June, the Massachusetts Pension Reserves Investment Management Board spent $150 million to buy an LP interest in Denham Capital Management Commodity Partners V through a secondaries purchase from Harvard Management Company.

The Kentucky Retirement System also turned to the secondaries market to bolster its returns. The $11.5 billion pension committed $26 million to the Camelot Acquisitions: Secondary Opportunities fund, which is targeting $250 million to $300 million.