Capital Dynamics, the Zug, Switzerland-based alternative asset investment consultant and private equity fund investor, has won its largest institutional mandate to date. The firm, founded in 1999, has been appointed by the Washington State Investment Board as its private equity consultant.
Capital Dynamics will help the $57 billion state retirement and public fund manager select private equity fund managers and handle relevant back office functions. The firm could not be reached for comment.
Washington is one the world’s largest investors in private equity. Established in October 1981, its private equity team has deployed over $15 billion in the asset class and generated over $6 billion in profits, according to its website.
On June 30, 2004, the market value of Washington’s current private equity portfolio weighed in at $6.2 billion. It intends to make new investments worth several billion dollars over the coming years.
Washington was one of the earliest backers of Kohlberg Kravis Roberts, the buyouts pioneer. It remains a major provider of capital to that firm, although in 2002 it declined an opportunity to invest as much as $1 billion for an undisclosed stake in KKR’s management company, a move seen by many as an effort on the parts of KKRs founders to monetise their franchise value.
The California Public Employees’ Retirement System, with a large stable of alternative investment advisors, has taken stakes in a number of private equity firms, including The Carlyle Group and Texas Pacific Group.
The appointment of Capital Dynamics, which the pension approved yesterday, marks the end of a five-year relationship with Pacific Corporate Group, the California-based gatekeeper.
Securing the mandate is a major coup for the Switzerland-headquartered group, which has offices in New York and London. Earlier this year, it acquired Westport Private Equity, the UK fund of funds, from hedge fund giant Man Group.
Through the acquisition, Capital Dynamics won The Bank of England, the European Investment Fund, Greater Manchester Pension Fund and Merseyside Pension Fund as clients.
In the US, the firm’s client base includes AIG and Prudential Financial. Prior to landing the Washington assignment, it looked after $5.25 billion worth of private equity investments.