Maryland commits almost $1bn to private equity

The pension made a host of private equity and real estate commitments in the fourth quarter, and plans on staying active in 2010, said Mansco Perry, Maryland's CIO.

The Maryland Retirement System committed almost $1 billion to private equity and real estate funds in the fourth quarter, staying on track as one of the most active private equity investors this year.

The pension, with about $32 billion in assets, made a big bet on the US government’s Public Private Investment Programme, which is intended to buy toxic assets from banks to help shore up the nation's financial system.

Maryland committed $100 million to RLJ Western Asset Management’s Public Private Investment Program (PPIP) vehicle. The pension also committed $75 million to funds run by Wellington Management and $50 million each to Marathon Asset Management’s and Angelo Gordon’s/GE Capital Real Estate’s PPIP vehicles.


White Deer Energy, the debut fund of former president of First Reserve Ben Guill, got $35 million from Maryland. White Deer’s debut fund is targeting $750 million for investments in mid-sized oil and gas exploration and production companies, energy infrastructure and companies that service the oil and gas industry.

Debt has become a top investment focus for Maryland. The pension in September created a separate bucket for debt-related strategies with room to encompass 5 percent of the fund’s total assets. Maryland committed $25 million to LBC Credit Partners II, a $750 million fund that makes asset-based loans in sizes ranging from $10 million and $30 million. LBC is backed by Lubert-Adler co-founder Ira Lubert and is part of the umbrella organisation, which includes Lubert-Adler Real Estate and LEM Mezzanine, another firm in which Lubert is a partner.

Also, Oaktree Capital Management received $200 million from Maryland, split in half between the firm’s eighth opportunities fund, targeting between $4 billion and $6 billion, and its fifth principal opportunities fund, targeting $5 billion for “loan-to-own” investments.
Maryland also invested €50 million in Park Square Capital Fund II, with a €1.5 billion target, and €25 million in Merit Capital Partners fifth mezzanine fund, which is targeting a maximum of $650 million.

Finally, the pension invested $75 million in a Landmark Partners secondary fund, and $25 million in Azure Capital Partners III, which is targeting $250 million.

Maryland has been one of the most active private equity investors this year after bumping its allocation to the asset class from 5 percent to 15 percent in September, 2008. Earlier this year, the pension cut the allocation to 12 percent.

Mansco Perry, the pension’s chief investment officer, plans to continue investing heavily in private equity, as well as debt strategies.

Maryland is interested in forming “long-term relationships” with some general partners, Perry said. “I’m hoping that we’ve earned a lot of GP respect, or at least it’s recognized that we’re committed to the asset class.”