Connecticut eyeing more opportunistic investments, issuing RFP

The Connecticut Retirement Plans and Trust Funds has added more than $500 million to alternative strategies, has studied three high-profile firms for new investment and is plotting an RFP this week for fund of hedge funds. The investment advisory council for the approximately $34 billion retirement fund chose a series of private investments within venture capital and private credit. Trustees approved to commit $75 million to the Constitution Fund V -- Series E, which is managed by Fairview Capital Partners. “With contract negotiations for the Constitution Fund V-Series E now complete, this commitment will continue our investments in venture capital and growth stage funds with high quality managers in partnership with Fairview Capital Partners,” said Connecticut State Treasurer Shawn Wooden. On the credit side three new allocations were made with Goldman Sachs and O’Brien-Staley Partners. A $350 million commitment was made to the Goldman Sachs Private Credit Partnership, $75 million to OSP Value Fund III and $37.5 million to OSP Value Fund III-B. More debt investment is on the horizon at the pension system which is also keeping a keen eye on opportunities with diverse managers even as the system's fund of hedge fund program is shrinking. Wooden said the latest commitments provide access to multiple underlying strategies with the flexibility to opportunistically invest capital as credit markets evolve. The system is currently considering three additional allocations with Fortress Lending Fund II and Fortress Credit Opportunities Fund V Expansion at $300 million, which will offer a total return strategy that invests in a range of distressed opportunities. Sixth Street Partners’ TSSP Adjacent Opportunities Partners (TAO 5.0) at $250 million is also being eyed closely. That strategy represents a broad range of credit and related opportunities across direct lending, opportunistic and special situation investments. Lastly, Torchlight Debt Opportunity Fund VII is being considered as a strategy to invest in both private and public debt across real estate property types and U.S. markets in a diversified portfolio that will offer current income and downside protection while opportunistically investing in commercial real estate debt markets. If all of those investment prospects weren’t enough to keep trustees busy, an RFP is expected to be issued this week for restructuring the system’s hedge fund investment allocation to focus on risk mitigating strategies in line with an asset allocation plan approved earlier this year. The current funds of hedge funds in the program -- The Rock Creek Group, Appomattox and Franklin Templeton (K2) would be eligible to participate, according to spokeswoman for the pension system. The alternative investment fund (AIF) where the funds are housed had its target allocation slashed in February to $1 billion from $2.5 billion. A new emerging and diverse manager program known as the Connecticut Inclusive Investment Initiative or C3 has also been launched. The program is expected to increase allocations to diverse managers across all asset classes. “Public pension plan emerging manager programs have fallen short of providing access to capital in a consistent and meaningful way,” Wooden said. “We have taken what we have learned from the past 15 years and the best practices from throughout the country to improve upon the success of the current “Horizon Fund” program.” According to the State Treasurer’s website, that program is now roughly a $1 billion fund of funds public markets program and includes a $155 million private equity allocation and a $170 million alternative investment allocation. Wooden said that the target percentage of allocated capital to diverse manager will double and a range of investment strategies will be broadened in order for Connecticut to take advantage of greater opportunities to improve risk-adjusted returns with emerging/diverse managers.

Connecticut eyeing more opportunistic investments, issuing RFP

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