Minnesota pension grows private markets exposure by nearly $1bn

St. Paul-based Minnesota State Board of Investments approved on December 2 commitments across seven investment firms in a bid to continue to grow its private market investment exposure across its $99.5 billion portfolio. The allocations total $950 million and include allocations to two new managers and allocations to private equity, distressed/opportunistic strategies, real estate and private credit. Officials said that private markets commitments can total a maximum of 20% of the underlying fund assets. Currently private markets accounts for 15.2% or roughly $10 billion of Minnesota’s overall portfolio, but carries a target allocation of 25% or $25 billion – which means another $15 billion could still be put to work in the asset class. Private equity managers received the greatest influx of capital in December totaling $550 million. Existing managers Lexington Partners, Leonard Green & Partners and Madison Dearborn Partners all received additional capital. Lexington Partners was awarded a $100 million mandate for its Co-Investment Partners V Overage Program, which is part of the $38 billion firm’s long-time co-investment business that has been embraced by public pensions including the Florida State Board of Administration in Tallahassee. Leonard Green & Partners received a $150 million commitment to it Green Equity Investors VIII, which is the latest in a line of buyout funds from the Los Angeles-based firm. Madison Dearborn Capital Partners VIII received a $100 million commitment. A new private equity portfolio manager is Vista Equity Partners Management, which will handle $200 million in its Vista Equity Partners Perennial Fund. The software industry fund last month invested in Accelya, a global provider of financial, commercial and analytics solutions to the airline and travel industry. Another new manager is private credit firm HPS Investment Partners, which will now manage $100 million in its HPS Mezzanine Partners 2019. Meanwhile, existing portfolio manager Marathon Asset Management received a $200 million mandate for its Marathon Distressed Credit Fund I as part of Minnesota’s distressed and opportunistic portfolio. US Real Estate specialist Rockwood Capital is also going to manage an additional $100 million in its Rockwood Capital Real Estate Partners Fund XI.

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