Oregon’s public employees’ pension, one of the earliest and most active private equity limited partners in the market, plans to commit $2 billion to private equity this year.
The pension has already spent $500 million of that amount in a major commitment to Kohlberg Kravis Roberts' eleventh North American fund.
The $2 billion for 2011 is actually less than the pension had originally anticipated. Oregon is reducing its commitment pace to bring the pension back within its target 12 to 20 percent allocation range to private equity.
Significantly, for managers already in Oregon’s portfolio, the bulk of the $2 billion in 2011 will be used for re-ups, according to Oregon pension documents.
There is a strong pipeline of existing managers who will be fundraising in 2011, and we anticipate 2011 commitments will be primarily re-ups with existing partners, and most at lower amounts than in the prior funds.
“There is a strong pipeline of existing managers who will be fundraising in 2011, and we anticipate 2011 commitments will be primarily re-ups with existing partners, and mostly at lower amounts than in the prior funds,” the pension said in meeting documents.
Oregon put more than $4.5 billion to work with private equity managers in 2006. The pension dramatically slowed commitments in 2009, allocating about $800 million, but jumped back up to around $2 billion last year.
Pacific Corporate Group Asset Management, Oregon's private equity advisor, presented the Oregon Investment Council with a pacing study at the meeting in February.
The study also included a chart of Oregon's longest relationships. KKR has been an LP for about 29 years and has produced an 18 percent internal rate of return over that time period. TPG has been with Oregon for 16.2 years and has produced a 15.8 percent IRR, and First Reserve, which has been one of the pension's GPs for almost 10 years, has generated a 29.3 percent IRR.