New Hampshire gets back into private equity

After a three-year hiatus, the $4.9bn pension committed $60m to private equity firms in 2009 and plans to spend another $60m this year.

The New Hampshire Retirement System, a public pension with about $4.9 billion in assets, re-started its stalled private equity programme last year and plans to continue investing in the asset class in 2010.

The pension, which has invested on and off in private equity since the early 1990s, plans to invest up to $60 million on three private equity strategies in 2010: secondaries, buyouts and mezzanine. New Hampshire has a 4 percent target allocation to private equity.

In 2009, New Hampshire committed $20 million to secondaries fund Lexington Partners Fund VII, which has been targeting $5 billion. Two other commitments – $20 million to Audax Mezzanine Fund III, which is targeting $750 million, and $20 million to Siguler Guff Distressed Opportunities Fund IV – are pending, according to internal pension documents.

As of 30 September, New Hampshire had invested $603.7 million in 50 funds. The pension made no investments in private equity in 2002 and 2003. The pension lost money on about $30 million in commitments it made in 2001. About $26 million of the 2001 investment has been called and the pension has received about $12 million in distributions on the investment. The total value of the 2001 investments stands at about $12 million.

New Hampshire also skipped committing to private equity from 2006 to 2008. The pension saw disappointing returns in 2005 on $20 million of commitments. About $19 million of the 2005 investment has been called, and the pension has gotten back just $3 million in distributions. The total value of the 2005 investments is about $14 million.

The pension is looking to commit $60 million to four funds in 2010, $60 million to six funds in 2011, $60 million to six funds in 2012 and $50 million to five funds in 2013. The investment strategies will shift in the later years, with the pension eventually targeting venture, growth capital and energy investments.

New Hampshire is working with New England Pension Consultants to build up its private equity portfolio.