Investor Base: Looking Inward

The Connecticut Retirement Plans & Trust Funds (CRPTF) recently launched a new initiative to provide $145 million in private capital to early stage and mature mid market companies operating within its own borders through a diversified investment program. In May, Connecticut State Treasurer Denise Nappier outlined the details of the effort to fuel job creation, economic growth and attractive “risk adjusted returns” for the state.

In a statement sent to Private Equity International in May, the treasurer noted the investments would be spread between private equity, private debt and venture capital (VC). A $29.4 billion pension system, the CRPTF has been working with consultant Franklin Park on the program’s strategy. From an administrative standpoint, the new initiative is being structured within the state retirement system’s Private Investment Fund, which similar to the new program is comprised of externally managed funds that invest in corporate private equity and VC strategies.
Nappier said the new initiative isn’t entirely altruistic: “It’s about making profitable investments that have the ancillary benefit of a positive macroeconomic impact on our state.”

According to Nappier, the Hartford – based retirement system selected New York’s J.P. Morgan Private Equity Group to manage a $50 million commitment that will make direct private equity investments from the Nutmeg Opportunities Fund II. Further, the state committed an additional $150 million to the J.P. Morgan unit, which has an existing mandate with the CRPTF, and has produced an 11.7 percent return since December 2014. 

Separately, Connecticut’s retirement system tapped Balance Point Capital Partners of Westport, Conn. to manage a $75 million commitment for making debt investments out of Connecticut Growth Capital. And, Fairview Capital Management will steward investment of a $20 million commitment from the Constitution Fund V for VC investments. In addition, the CRPTF confirmed a $180 million follow on commitment to Fairview in May.

Similar to J.P. Morgan, Fairview has been an existing fund manager with Connecticut and managed its VC program for the last 11 years. Since December 2014, the West Hartford, Conn.-based manager of three VC funds for the state has generated a combined 12.7 percent return over 10 years for the CRPTF.

Businesses in underserved communities are also expected to be targets for investment. If data from the US Small Business Administration offers any indication, Connecticut should offer plenty of small deal flow for the three fund managers. Connecticut has at least 329,307 small businesses, employing about half of the state’s private sector workforce.

The CRPTF, which has supported state businesses with $235 million of in-state private equity investments, oversees the State of Connecticut’s investment activity on behalf of 212,000 pension fund beneficiaries and taxpayers.