Idaho hits 83% of private equity investment target

The pension system portfolio’s 7.72% IRR since inception has benefitted in large part to the recent performance of CVC European Equity Partners IV.

The Public Employee Retirement System of Idaho has made $165 million in commitments to private equity this year across five funds, according to pension system documents disclosed at its 25 October meeting. The $11 billion pension system is targeting $200 million in private equity investments this year.

The largest commitments went to Providence Equity Partners VII and Kohlberg Investors VII, both of which received $40 million. TPG Growth II and Blackstone Energy Partners each secured up to $30 million in commitments and Endeavour Capital Fund VI obtained a $25 million commitment. With the exception of Endeavour, all of Idaho’s private equity investments this year have been re-ups, according to a report from advisor Hamilton Lane.

As of 30 June, Idaho’s private equity portfolio has generated a 7.72 percent internal rate of return since inception, a 2 percent increase from last year, according to pension documents. The portfolio’s recent growth benefited from the performance CVC European Equity Partners IV, which accounted for 10 percent of the portfolio’s net value increase during the second quarter. The fund, which raised €6 billion in 2005, was netting a 13.96 percent IRR as of 30 June, according to pension documents.

Idaho’s 9 percent private equity allocation is heavily dominated by North American buyout strategies, tilted slightly toward mega-buyout funds, which comprise 34 percent of the pension system’s total commitments to the asset class. The retirement system increased its exposure to mega-buyouts by 2 percent with its most recent commitment to Providence.

Providence, which is targeting $6 billion for its seventh fund, recently completed a 5x exit of of Kabel Deutschland, according to sources close to the transaction. The firm began drawing down on its investment with Kabel’s €760 million initial public offering last year, ultimately making more than $3 billion on its investment in Germany's largest cable operator.