Key Takeaways
- • The New York State Teachers' Retirement System, Albany, announced eight private markets commitments totaling $1.6 billion at its Oct. 29 quarterly board meeting, alongside authorization of up to $1.1 billion in equity investments.
- • The system reported an audited net return of 16.1% for the fiscal year ended June 30, versus a 6.95% assumed rate of return, with fiscal-year net assets of $171.4 billion, up 11% year over year.
- • The largest private markets commitment is up to $500 million to Abbott Select EM III, an existing relationship with Abbott Capital Management, targeting emerging managers in North American buyout and growth equity.
- • Up to $600 million to WCM Investment Management (global equity, MSCI ACWI benchmark) and up to $500 million to Earnest Partners (international equity, MSCI ACWI ex-U.S.) were approved subject to due diligence as "initial funding."
- • The estimated funded ratio was 112% on a market-value basis and 101% on an actuarial-value basis as of June 30.
Summary
The New York State Teachers' Retirement System, based in Albany, made eight private markets commitments totaling $1.6 billion, according to the system's governing board, which announced the decisions on Oct. 29 at its quarterly meeting. According to Pensions & Investments, the board also authorized up to $1.1 billion in equity investments. The system reported an audited net return of 16.1% for the fiscal year ended June 30, well above its 6.95% assumed rate of return and exceeding the 10.6% net return for the prior fiscal year. Fiscal-year net assets totaled $171.4 billion, an 11% increase over the previous year. The five-year net annualized return was 7.7%, the 10-year was 9.8%, and the 20-year was 8%.
In private equity, the board approved a commitment of up to $500 million to Abbott Select EM III, managed by Abbott Capital Management, an existing relationship. The fund will make direct fund commitments to emerging managers in small- and midmarket North American buyout and growth equity, along with direct co-investments and secondary investments. The system previously committed $500 million to other Abbott emerging manager funds. An additional $50 million went to NMS Fund V, managed by NMS Capital, which focuses on small and midmarket buyouts in healthcare and business services.
Under retirement system rules, the chief investment officer was permitted to negotiate a further $1.13 billion in private markets commitments without a board vote. These include $200 million to TPG Real Estate Partners Fund V plus $100 million for co-investments, targeting U.S. and European real estate; up to $200 million to WhiteHawk V Onshore Fund, managed by Whitehawk Capital Partners, a new relationship providing capital to liquidity- or cash-flow-challenged North American companies backed by collateral; $200 million to Crestline Portfolio Financing Fund III, managed by Crestline Management and Waystone Management, an existing relationship focused on senior secured loans and preferred equity; up to $150 million to L2 Point Opportunities II, a new relationship providing structured equity to late-stage North American growth companies; $100 million to Brookfield Infrastructure Debt IV plus a $50 million co-investment vehicle, investing in secured, subordinated debt of essential infrastructure assets; and $75 million to Artemis Real Estate Partners Healthcare Fund III, an existing relationship investing in senior housing and medical office properties.
On the equity side, the board approved, subject to due diligence, up to $600 million with WCM Investment Management for a global equity mandate benchmarked to the MSCI ACWI Index, and up to $500 million with Earnest Partners for an international equity mandate benchmarked to the MSCI ACWI ex-U.S. Index. A board document described both as "initial funding."
As of June 30, the estimated funded ratio was 112% based on market value of assets and 101% based on actuarial value of assets.
In private equity, the board approved a commitment of up to $500 million to Abbott Select EM III, managed by Abbott Capital Management, an existing relationship. The fund will make direct fund commitments to emerging managers in small- and midmarket North American buyout and growth equity, along with direct co-investments and secondary investments. The system previously committed $500 million to other Abbott emerging manager funds. An additional $50 million went to NMS Fund V, managed by NMS Capital, which focuses on small and midmarket buyouts in healthcare and business services.
Under retirement system rules, the chief investment officer was permitted to negotiate a further $1.13 billion in private markets commitments without a board vote. These include $200 million to TPG Real Estate Partners Fund V plus $100 million for co-investments, targeting U.S. and European real estate; up to $200 million to WhiteHawk V Onshore Fund, managed by Whitehawk Capital Partners, a new relationship providing capital to liquidity- or cash-flow-challenged North American companies backed by collateral; $200 million to Crestline Portfolio Financing Fund III, managed by Crestline Management and Waystone Management, an existing relationship focused on senior secured loans and preferred equity; up to $150 million to L2 Point Opportunities II, a new relationship providing structured equity to late-stage North American growth companies; $100 million to Brookfield Infrastructure Debt IV plus a $50 million co-investment vehicle, investing in secured, subordinated debt of essential infrastructure assets; and $75 million to Artemis Real Estate Partners Healthcare Fund III, an existing relationship investing in senior housing and medical office properties.
On the equity side, the board approved, subject to due diligence, up to $600 million with WCM Investment Management for a global equity mandate benchmarked to the MSCI ACWI Index, and up to $500 million with Earnest Partners for an international equity mandate benchmarked to the MSCI ACWI ex-U.S. Index. A board document described both as "initial funding."
As of June 30, the estimated funded ratio was 112% based on market value of assets and 101% based on actuarial value of assets.
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