New Private Equity Commitments Continue at Washington State Investment Board

Up to $650 million in new commitments are part of a plan to keep up the retirement system’s 20%-plus allocation to private equity.

The Washington State Investment Board (WSIB) has made up to $650 million in commitments to two private equity funds. 

WSIB said in a press release that up to $350 million was committed to Apax X, L.P., a global buyout fund with a target size of $10.5 billion.

Washington State investment officials say they have had a 20‐year partnership with the fund’s manager, Apax Partners, investing in five previous funds since 1998.

In addition, up to $300 million was committed to Warburg Pincus China Southeast Asia II, L.P. The fund has a target size of $3.5 billion and is being raised by Warburg Pincus LLC. WSIB has had a 24‐year partnership with Warburg Pincus, investing in 12 previous funds since 1994, pension plan officials say. 

The commitment to both private equity funds was made by WSIB investment staff using delegated authority, the press release noted.

WSIB Trustees did not have to approve the commitments. Both were recommended by WSIB private equity consultant Hamilton Lane. Since late February, WSIB has made more than $3.6 billion in new commitments to private equity.

The commitments are part of a plan to keep up the large percentage of pension plan assets that are devoted to private markets.

It comes as other WSIB funds are being liquidated as their investment cycle wraps up. As of March 31, the latest numbers reported, private equity made up 20.98% of the $104 billion pension fund’s overall assets.

With $21.8 billion invested, WSIB has one of the largest overall investments in private equity among institutional investors in the US.  

Its 20.98% allocation is also more than twice as large as those of the two largest US pension plans, the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS). 

Building on long-term relationships, WSIB Chief Investment Officer Gary Bruebaker and his private equity investment staff have been able to obtain new commitments in private equity funds on a consistent basis from top performing managers—despite increasing competition from other institutional investors. 

CalPERS and CalSTRS officials have tried to increase the size of their private equity programs, but due to the difficulty of getting into all the new PE funds they want, hey have both faced shrinking programs.

When other private market programs are also counted, such as real estate, infrastructure, and tangible assets, WSIB has an approximate 40% allocation to private markets. Such an allocation is unique among public pension plans and is more typically found in the asset allocation of college foundations.

Bruebaker is retiring at the end of this year after 18 years at WSIB. The pension organization is conducting a national search for his replacement.

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