Oregon to Invest Up to $3.5 Billion in Private Equity in 2019

Plans to relaunch revised co-investment program and beef up PE team.

As a part of its 2019 private equity plan, the Oregon Investment Council (OIC) is expected to invest $2.5 billion to $3.5 billion, increase the team’s capacity, expand existing gross-to-net mitigation capabilities, and enhance due diligence and monitoring capabilities.

The OIC oversees the investment and allocation of the Oregon Public Employees’ Retirement Fund, the Common School Fund, and the State Accident Insurance Fund.

The new investments are expected to be provided across 10 to 15 commitments ranging in value from $100 million to $500 million each, with a buyout-heavy strategy. The commitments will coincide with a relaunch of the council’s revised co-investment program, in addition to a key initiative to exploit negotiated/structured discount opportunities.

The OIC is expecting to invest a similar amount of capital to the asset class each year to manage the fund’s exposure to the middle of the target range (13.5%-21.5%) over time.

The program also plans to leverage its relatively large scale to negotiate material discounts on fees and carried interest savings. In 2018, the council selected an external manager to restart the program’s co-investment program, inclusive of a negotiated/structured discount with an emphasis on systematic sector, geography, and strategy exposure. The account also allows the OIC to refresh capital regularly to provide additional pacing flexibility for the overall program.

The OIC’s private equity program had a net asset value of $16 billion as of June 30, 2018, according to a recently issued report, representing 22% of the full portfolio at the time. A summary of its exposure can be seen below:

The OIC brought Blackstone to its first meeting in 2019 to consider a $500 million commitment to Blackstone Capital Partners VIII (BCP VIII), a fundraise targeting $20 billion. The commitment would represent a “continuing partnership” between the entities, including three previous private equity commitments totaling $850 million since 2011.

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