The State of Wisconsin Investment Board (SWIB) is not planning sell private equity fund stakes on the secondaries market as it prepares to cut several existing partnerships.
SWIB, which is planning to commit $1.5 billion to private equity in 2016, aims to bring the portion of capital allocated to existing general partners to 85 percent of the portfolio, according to a report from its 13 April board meeting.
A spokeswoman for the $83 billion pension confirmed to sister publication Private Equity International it would discontinue some existing relationships by not re-upping with the managers’ funds.
SWIB plans to make commitments of $25 million to $150 million each to 15 to 20 new private equity funds, and $10 million to $40 million in five to eight co-investments. The board will focus on the small and mid-market GPs, according to the report.
At the end of 2015, its private equity portfolio was invested 71 percent in buyout funds, 2 percent in secondaries funds and 2 percent in co-investments. It is seeking to raise its exposure to co-investments to 7.5 percent over the long-term.
Private equity represented 6.6 percent, or $5.5 billion, of the pension’s entire portfolio, and private equity co-investment 0.2 percent, or $150 million, of its total exposure, on 29 February.
It has so far committed $183 million to 11 co-investments with eight different GPs. The co-investment portfolio’s net internal rate of return (IRR) on 31 December was 14.7 percent, above the average 13.2 percent net IRR for the overall private equity. The only other sub-strategies within private equity that beat that average net IRR were mid-market buyouts, which returned 21.9 percent, and large buyouts, which returned 18.3 percent.
In secondaries, it transferred 100 percent of its interest in Charterhouse Capital Partners (CCP) VII and CCP VIII to Hamilton Lane, Northwestern Mutual Life Insurance Company, and Pomona Capital in October, as reported by Secondaries Investor.
In the first quarter of calendar year 2016, the SWIB committed $23 million to co-investing, the document said.