Ohio Schools to commit up to $250m in FY2013

The $10.6bn School Employees Retirement System of Ohio plans to continue the process of building up its private equity portfolio in the next fiscal year, and may explore co-investment opportunities.

The School Employees Retirement System of Ohio's board of trustees approved its 2013 fiscal year investment strategy, which includes plans to invest between $150 million and $250 million in private equity with a focus on buyout funds.

In addition to buyouts, OHSERS investment staff will also spend the next fiscal year exploring commitments to special situation funds, which the retirement system defines as energy funds, secondary funds, distressed debt funds and co-investment opportunities, according to documents.  

OHSERS has spent the 2012 fiscal year bulking up its private equity portfolio, which is under its target allocation of 10 percent. 

In addition to approving the FY2013 strategy, OHSERS also committed $50 million to Warburg Pincus Private Equity XI at its meeting last week, according to a retirement system spokesman. The retirement system previously committed to Warburg Pincus’ 10th flagship fund, which is the largest single holding in the $10.6 billion retirement system’s private equity portfolio. 

Warburg Pincus Private Equity X raised $15 billion in 2007 and has generated a 1.01x return multiple and 0.6 percent internal rate of return, according to New Jersey Division of Investment documents from 22 March. 

As with Fund X, the firm’s 11th fund will implement growth equity and leveraged buyout strategies across a number of sectors, including technology, media, telecommunications, consumer and industrial, financial services, life sciences, natural resources and real estate, according to New Jersey documents. The firm does not have a regional focus, and will explore opportunities in the US, Europe and Asia. 

Fund XI is targeting $12 billion and has a 1.4 percent management fee that can be adjusted for larger commitments, according to a source with knowledge of the fund. This appears to have been the case for New Jersey Division of Investment, whose fund documents indicate that the pension fund will pay a 1.3 percent fee during the commitment period, a 1.25 percent fee during the post-investment period and a 1 percent fee thereafter. New Jersey committed $300 million to the fund. 

The firm’s two co-presidents, Charles Kaye and Joseph Landy, are key men on the fund. 

Warburg Pincus was founded in 1966 after Lionel Pincus acquired EM Warburg & Co. The firm has invested more than $40 billion across around 650 companies.