Washington State Investment Board Commits More than $2 Billion to Private Equity

The latest commitments are part of efforts by the system’s investment staff to maintain a large percentage of plan assets in private markets.

The Washington State Investment Board (WSIB) has committed up to $2.1 billion to four new private equity funds as the pension fund continues its focus on private markets.

The latest commitments, which were announced at the retirement system’s April 18 board meeting, come as the $103.2 billion retirement plan replaces private equity funds that have liquidated their assets.

WSIB maintains one of the biggest commitments to private markets among large US pension plans. As of Dec. 31, 2018, 27% of plan assets were allocated to private equity, 16.71% to real estate, and 4.7% to tangible assets.

The biggest commitments announced at the April 18 meeting were to two buyout funds, shows a system news release and agenda material. A commitment of up to $750 million was made to Advent International GPE IX, L.P., a private equity fund with a $16 billion target. Another $750 million was committed to Blackstone Capital Partners VIII, L.P., a global private equity fund with a target size of $20 billion.

The funds are among the largest private equity funds ever raised and show the rise of the mega-buyout funds.

The Advent International Fund will invest primarily in Europe and North America while the Blackstone fund, sponsored by The Blackstone Group, will invest in Europe, Asia, and North America.

The next biggest commitment announced at the April 18 meeting was up to $400 million to TA XIII, L.P., a private equity fund with a target of $7.5 billion. The TA Associates fund will focus on global growth companies and small to medium buyouts.

The commitments to the three funds were all made using delegated authority of the investment board’s investment staff.

The investment board directly approved one investment at the April 18 meeting, up to $200 million in Searchlight Capital III, L.P., a multi-strategy private equity fund with a target size of $2.75 billion. The Searchlight Capital fund will focus on value-oriented investments in North America and Western Europe.

All four of the commitments were recommended by WSIB’s private equity consultant, Hamilton Lane.

The board at the April 18 meeting also approved the changing of the structure of an existing $500 million commitment between WSIB and Geronimo Renewable Infrastructure Partners, L.P. (GRIP), a North American fund focused on renewable energy.

The restructuring was necessary because National Gird, a firm specializing in wind and solar power, announced on March 7 that it was acquiring Geronimo, shows the Washington State press release as well as a National Grid press release.

This restructuring will allow the WSIB to form a new partnership with National Grid, says the WSIB press release.

National Grid in its own press release says it is also progressing an agreement to acquire a 51% share in 378MW of solar and wind generation projects developed by Geronimo (in operation and under construction) for $125 million.

The press release says the projects, which have long-term power purchase arrangements in place, will be jointly owned by National Grid and WSIB. The projects would be operated by National Grid. The press release said the joint venture with WSIB will have right of first offer on future projects developed by Geronimo Energy.

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