The Indiana Public Retirement System’s private equity investments in the most recent fiscal year have posted their lowest return since the 2008-2009 financial crisis.
The INPRS private equity portfolio showed a 6.81 percent net internal rate of return for the 2016 fiscal year ended 30 June, according to materials for the Indianapolis-based pension’s 3 March meeting. This is the lowest return since the 2009 fiscal year ended 30 June 2009, when the $26 billion pension’s private equity portfolio generated a net loss of 19.17 percent.
As of 31 January, the private equity portfolio had returned 5.77 percent net IRR for fiscal year 2017, above the 4.64 percent net IRR generated during the same period in the previous year, ending 31 January 2016.
INPRS one-year return as of 31 January was a 7.96 percent IRR, which lagged behind the 10.76 the pension plan posted the same time last year.
The same was true for multiyear periods. For the three- and five-years ending 31 January, INPRS posted 11.59 percent and 12.77 percent, respectively, which was behind the 13.85 percent and 13.89 percent three- and five-year returns posted as of 31 January 2016.
Ten-year returns for 31 January were 9.12 percent, down from the 10.25 percent return posted the same time last year.
The 7.96 percent annualised return ending 31 January was considerably below the annualised returns between 2010 and 2016 that averaged 13.7 percent.
As of 31 January, INPRS had allocated 13 percent, or $3.4 billion, of its total portfolio to private equity, above its 10 percent target allocation.
INPRS kicked off its 2017 calendar year with two private equity fund commitments, both of which established new relationships, according to the materials. Those commitments include $50 million to Bregal Sagemount II-B, which closed mid-February on $960 million, and $75 million to Veritas Capital Fund VI, which also closed last month on $3.55 billion.
INPRS is currently in its first fiscal year with its new chief investment officer, Scott Davis, who was promoted from his former position as deputy CIO in July, as reported by Private Equity International. Davis replaced former CIO David Cooper, who left the pension for a similar position at the Purdue Research Foundation.