Private Markets / Insights

CalPERS reported the most private equity allocations in the first quarter with 32 totaling $6.2 billion. The pension plan reported allocations to three strategies from CVC Capital Partners totaling nearly $1.1billion. Large allocations were also reported to Bain Capital Private Equity ($458 million) and PSG ($400 million). The smallest allocation reported by CalPERS in the quarter was $50 million to Acrew Diversify Capital Fund II.

Los Angeles County Employees Retirement Association (LACERA) was also active in Q1 2024 with $940 million in reported commitments. The plan’s largest reported allocation was $400 million to Clearlake Capital Partners VIII while the smallest was a $75 million co-investment commitment with Leonard Green & Partners.

Excluding CalPERS, Wisconsin Investment Board reported the most allocations to private equity in the quarter with 10, none of which were larger than $100 million. The pension plan mixed allocations to established managers like Ares, Blackstone, and Lindsay Goldberg with allocations to emerging managers including Ballast Equity Partners and Turnspire Capital Partners.

In terms of destinations for capital, General Catalyst and Wynnchurch Capital each received five reported commitments by pension plans.

According to Forward Calendar in Nasdaq eVestment TopQ+, over 230 private equity and venture capital funds are confirmed or projected to be in market fundraising over the next 12 months. These funds are seeking to raise approximately $275 billion from investors. Buyout funds in market are seeking an average fund size of $1.8 billion while fundraising growth equity funds have a $1.4 billion average fund size target. At the other end of the spectrum, venture capital funds are targeting a $320 million average fund size. Worth noting are the 17 secondaries funds raising capital over the next 12 months suggesting that there is demand from allocators for alternative forms of liquidity.

In the first quarter of 2024 the most viewed private equity document by Market Lens users was the Strategic and Tactical Plan prepared by StepStone Group for Los Angeles Water & Power Employees’ Retirement Plan. The document outlines how the pension plan will work to allocate $525 million to private equity funds in 2024. According to the strategic plan they will increase geographic diversification through commitments to European managers as well as those in Asia and emerging markets. In terms of strategy they will target late stage and growth capital funds.

The Private Equity Annual Review & 2024 Plan for Oregon PERS was also widely viewed in Q1 2024. When looking back on 2023 the review noted that it was the first year that the Oregon PERS private equity portfolio had net contributions (more capital call contributions than fund distributions) since the global financial crisis. In total the plan reported 10 private equity contributions totaling $2.1 billion in 2023. Looking forward to 2024, the document states that Oregon PERS will target 10-15 new commitments sized between $100 and $350 million.

Adams Street presented a private equity educational session to Chicago Teachers in February 2024 and the slide deck from the event was a popular document with Market Lens clients in the quarter. The deck provides a primer on the asset class and the wider private markets, as well as a look at Adams Street’s key differentiators as a fund manager.

In terms number of commitments, Illinois Muni was the most active public pension plan allocator to private debt in Q1 2024 with 11 reported commitments totaling approximately $830 million. The largest, at $125 million was allocated to a direct lending SMA strategy managed by Jeffries Asset Management. A majority of the pension plan’s other reported commitments were sized between $50 million and $75 million, including allocations to CapitalSpring, Comvest Advisors, and MC Credit Partners.

After Illinois Muni, the next most active allocator by total number of commitments to private debt was Alaska Permanent with six commitments totaling $295 million. The pension plan allocated $100 million to LBC Credit Partners VI and a related co-investment vehicle, as well as $100 million to Crestline Investors split evenly between a specialty lending and a direct lending strategy. The remaining commitments went to Alchemy Partners and Ares Management.

New Mexico SIC was also active in the first quarter in terms of dollar commitments to private debt with $500 million across two allocations. The larger of the two, at $350 million was reported to Oak Hill Advisors Senior Private Lending Fund (OLEND). In their recommendation of the allocation, New Mexico SIC’s consultant, Meketa notes the funds unique fund structure, “a hybrid evergreen structure with a 3-year initial investment period and an automatic rolling 2-year investment period until the investor opts out.” The pension plan also allocated a reported $150 million to Silver Point Specialty Credit III, their fourth allocation to the manager to date.

According to Forward Calendar in Nasdaq eVestment TopQ+, 29 private debt funds are confirmed or projected to be in the market fundraising for a first close in the next 12 months. These funds are seeing nearly $43 billion in commitments from allocators. While direct lending funds continue to be the most common strategy for private debt funds in market, the prospective special situations funds in market are targeting a larger median fund size ($1.4 billion compared to $1.2 billion). Fundraising mezzanine funds have the smallest median fund size at $525 million.

In contrast to private equity, the most viewed private debt documents with Market Lens users in the first quarter were fund presentation decks. This suggests that allocators are exploring new strategies and/or that private debt fund managers are spending time on peer competitive analysis.

The most viewed presentation deck in Q1 was that of Ares Senior Direct Lending Fund III which was presented to San Diego City ERS. The fund is part of Ares’ $191 billion global direct lending platform. In the presentation Ares highlights the size of their direct lending investment team of over 190 professionals, and their investment process as key advantages. The deck highlights that between 3% and 5% of deals analyzed result in an investment from the manager.  

The slide deck for the Oaktree middle-market direct lending strategy was also widely viewed in the quarter. In contrast to the Ares presentation when focused on the firm and strategy, the Oaktree presentation focuses more on the current opportunity set in middle market direct lending and how it has changed since the GFC and since covid. Oaktree notes that today’s direct lenders must be prepared for a variety of hard and soft landing outcomes as interest rates change.

Rounding out the most popular private debt pitch decks in the quarter was that of Fortress Credit Opportunities Fund V Expansion, which was presented to Marin County ERA in January 2024. According to the deck, the strategy and related SMAs have invested and committed over $5.9 billion in 97 investments and expected to generate an estimated 20.7% gross IRR and a gross MOIC of 1.8x.

Wisconsin Investment Board reported the most real estate allocations in the quarter with five totaling $488 million. The pension plan’s largest reported commitment was $175 million to a separate account vehicle called DWS Construction Lending Tranche II which will execute a non-core real estate debt strategy. Wisconsin Investment Board also reported a $100 million allocation to a joint venture with SRE Wilson Industrial Holdings. The other three reported commitments went to commingled funds managed by EQT Exeter, FPA Multifamily, and Heitman.

Indiana Public Retirement System was the only other pension plan to report more than two real estate allocations in the quarter. Their largest allocation, at $100 million, was reported to Related Realty Fund IV, a diversified, opportunistic real estate strategy focused on the United States. The remaining two reported commitments were made to co-investment strategies managed by LongPoint Realty Partners and Intermediate Capital Group respectively.

Also notable in Q1 was New Jersey Division of Investment with their $350 million commitment to Cerberus Institutional Real Estate Partners VI. According to the investment memo for the commitment, the fund, “is a global, multi-strategy, debt and equity fund focused on opportunistic, undervalued and/or distressed real estate [and] presents a compelling opportunity to capitalize on market conditions.” The pension plan also reported a $150 million allocation to KSL Capital Partners Tactical Opportunities Fund II. The single largest real estate allocation in Q1 2024 was $750 million from CalPERS to Pacific Multifamily Investors.

According to Forward Calendar in Nasdaq eVestment TopQ+, 38 real estate funds are confirmed or projected to be in the market fundraising for a first close in the next 12 months. Over 70% of these strategies are targeting investments in the North American market. Nearly 20% of the real estate funds coming to market are pursuing a real estate debt strategy. While 8 funds are targeting fund sizes over $1 billion, the median fund size target for the cohort is $447 million.

A slide deck covering Blackstone Property Partners US (BPP US) was the most viewed real estate document on Market Lens in Q1 2024. The deck begins with a detailed review of Blackstone’s global footprint and the scale of its $332 billion real estate platform. It then highlights North American industrial, multifamily, student housing, and data centers as the sectors where Blackstone has the highest conviction for the future. When discussing the BPP US strategy in detail, the presentation explores how the strategy will approach each of these high conviction sectors.

Also popular in the quarter was the slide deck for Brookfield Strategic Real Estate Partners V (BSREP V), which was presented to Teachers’ Retirement System of Louisiana in November 2023. Like Blackstone, Brookfield emphasizes the incredible size of their organization, which manages approximately $850 million across real estate and other private markets asset classes, and their areas of investment focus. A key difference between Brookfield’s presentation and Blackstone’s is the use of two case studies and personalization for the prospective client. The deck highlights the $870 million that the fund manager has invested in Louisiana

The Real Estate Portfolio Annual Review & 2024 Plan for Oregon PERS was the most viewed real estate document authored by an allocator in Q1 2024. After allocating $550 million to real estate strategies in 2023, the pension plan is targeting between 4 - 7 commitments ranging from $100 - 250 million in size in 2024.

CalPERS reported six real assets allocations totaling $3.0 billion in Q1 2024 and accounted for 55% of all dollar commitments reported in the quarter. The titanic pension plan’s largest reported allocation from the quarter was $1.7 billion to Global Infrastructure Partners V and a related co-investment vehicle. Other large commitments reported in the quarter by CalPERS went to BentallGreenOak ($500 million) and Harbert Management Corporation ($300 million).

Alaska Permanent was also active in the first quarter with five reported commitments to real assets across energy and infrastructure strategies. Kayne Private Energy Income Fund III and LS Power Equity Partners V each saw reported commitments of $100 million from Alaska Permanent. The pension plan also reported a $50 million allocation to KKR Global Infrastructure Investors IV Co-investment. According to a February 2024 asset class update, Alaska Permanent has reviewed 45 infrastructure co-investments opportunities over the preceding 18 months and had executed just one. Commitments were also reported to EQT Infrastructure VI ($50 million) and Peppertree Capital Fund X ($75 million).

Virginia Retirement System was the only other pension plan to report more than a single real assets allocation in the first quarter. The pension plan allocated $200 million to an SMA managed by PGIM that will focus on North American oil & gas lending and $100 million to DigitalBridge Partners Fund III, a digital infrastructure fund.

In terms of popular destinations for capital in Q1 2024, Stonepeak Infrastructure Fund V saw allocations reported by four public plans in the quarter: Louisiana Teachers, Rhode Island ERS, Seattle City ERS, and State of Rhode Island Defined Contribution Retirement Plan.

According to Forward Calendar in Nasdaq eVestment TopQ+, 13 real assets funds are confirmed or projected to be in the market fundraising for a first close in the next 12 months. Infrastructure is the most common strategy for those coming to market followed by natural resources. That said, the average fund size sought by these strategies are vastly different. The capital raising infrastructure funds are targeting a $1.8 billion average fund size while the natural resources funds are targeting a $200 million average fund size. The largest real assets fund set to be in market fundraising is a $5.8 billion real assets secondaries strategy.

Mirroring activity in private debt, the most viewed real assets documents in the first quarter were slide decks for well-known fund managers and their latest fund offerings.

The most viewed presentation was that of Stonepeak Infrastructure Fund V which was presented to Rhode Island ERS in January 2024. The $57.9 billion AUM fund manager highlights their 11-year track record in infrastructure and real assets and their global footprint as key differentiators. Also highlighted in the deck are a series of detailed case studies that outline Stonepeak’s value creation processes for different types of investments. The fund is seeking a $15 billion fund size and will target a mid-teens gross IRR with a net IRR of 12%.

Also widely viewed was a slide deck for IFM Global Infrastructure Fund which was presented to Palm Beach Gardens Police Pension Fund. Like Stonepeak’s deck, IFM’s highlights their long track record and global reach as key strengths of the organization. Uniquely, the IFM deck provides insight into their investor base with a breakdown of investor type and region. This demonstrates the diversity of their investors and shows potential LPs who their peers would be. The presentation also provides a deep dive into the manager’s approach to sustainable investing.