Recent initiatives place MetLife in the GI 100 vanguard

The $639bn insurer has made headway in recent years across co-investments, emerging managers and the secondaries market.

When it comes to private equity, MetLife Investment Management is no new kid on the block. The New Jersey-based institution, which appears in the GI 100 this year at number 41, has been investing in private equity since the mid-1980s and was an LP in the likes of Blackstone’s and CVC Capital Partners’ debut funds.

“[Faster fundraising cycles] will have an impact on how we are thinking about our portfolio”

Elvin Lopez

With around $13 billion in private equity assets by net asset value as of end-December, MetLife ranks higher than some of private equity’s best-known investors, such as Massachusetts Pension Reserves Investment Management Board, Pennsylvania Public School Employees’ Retirement System and Los Angeles County Employees’ Retirement Association.

The bulk of MetLife’s PE portfolio comprises buyouts at 60 percent, with venture accounting for around 25 percent, special situations at between 12 and 13 percent, and the remainder labelled “other”, Elvin Lopez, managing director at MetLife, tells Private Equity International.

Multiple strategies

MetLife has launched at least three initiatives when it comes to its private equity programme in recent years. The first is its co-investment programme, which launched last year. The insurer eventually wants co-investments to account for between 8 and 10 percent of its private equity AUM, with between $150 million and $200 million in annual deployment via roughly $10 million to $15 million tickets, says Lopez.

The investor only co-invests with managers in which it is already a fund LP, and will only back opportunities in sectors where the GP has shown a high degree of success, Lopez adds. The 25 deals it has backed so far were all on a no-fee, no-carry basis, and MetLife can typically underwrite a transaction within about two to four weeks.

The second recent initiative is its emerging managers programme, which also launched last year, and which backs female- and minority-owned managers on Fund III or less. MetLife has already committed at least $50 million in total via this programme, which is mainly US-centric.

Its third initiative is in secondaries. In April, the insurer said it had sold around $1.2 billion of private equity and VC assets with funded and unfunded commitments into a separate fund, which it will continue to manage, in a process that allowed it to seed a third-party private assets fund. The transaction involved $400 million in additional capital to back new opportunities, according to a statement made at the time.

What’s next for MetLife’s private equity programme? According to Lopez, the insurer isn’t likely to change its annual deployment of between $2 billion and $2.5 billion anytime soon. It does, however, plan to grow its team, and will go from 12 professionals to 14 this summer.

With GPs coming back to market more frequently than in previous years, MetLife will need all the hands on deck it can get.

“I think that [faster fundraising cycles] will have an impact on how we are thinking about our portfolio,” Lopez says. MetLife will need to think about its portfolio construction given this dynamic – something that will likely translate into adding fewer additional managers and rethinking commitment sizes.

“All the LPs have built their portfolios with the expectation that managers will be back in the market within a certain period of time,” he says. “That dynamic has changed.”