Side Letter: NPS’s PE conviction; Tenzing’s £100m companion; Hunter Point’s BX hire – updated

Korea's $773 billion pension giant is devoting a larger proportion of its alternatives bucket to private equity. Plus: Europe's Tenzing has raised a companion fund to facilitate larger acquisitions and Bennett Goodman's GP stakes firm, Hunter Point, has recruited a former Blackstone executive. Here's today's brief, for our valued subscribers only.

They said it

“I’ve been on three carve-out pitch calls this morning.”

Yawar Murad, managing director at special situations specialist Alvarez & Marsal, tells Private Equity News that he’s never seen so many carve-out deals in market as businesses look to shore up their balance sheets during the pandemic.

Just happened

Korean flag

NPS: Seoul-d on PE
Korea’s National Pension Service appears to be putting more faith into private equity as the investment giant looks to massively expand its exposure to alternatives. The 919 trillion won ($773 billion; €684 billion) fund saw its PE holdings reach 37.7 trillion won as of 30 September, representing 37.5 percent of its total alternatives portfolio, according to newly disclosed figures on its website. This is up from 36.8 percent at the end of 2020 and 34.9 percent in 2019. Its PE AUM has nearly doubled from 20 trillion won over the past five years.

Alternatives have been the pension’s second-best performing asset class this year, returning 10.12 percent in the first nine months. Only global equities have performed better, at 22.66 percent. It’s therefore little surprise that NPS has big plans for alternatives, aiming to increase its exposure from 10.9 percent currently to 15 percent by 2025.

NPS only began sharing detailed breakdowns of its investment holdings this year in a bid to become more transparent. In its first annual disclosure in August, NPS shared – in Korean – a wealth of information, including the strategic breakdown of its PE portfolio and largest fund exposures. PEI collated these details into a series of handy charts that you can view here.

Tenzing’s companion
European buyout firm Tenzing is understood to have raised raised £100 million ($133 million; €118 million) for a companion vehicle to invest alongside its £400 million flagship fund. Tenzing Belay I will provide additional funding for the firm’s existing portfolio companies and help the 2020-vintage Tenzing Private Equity II to acquire larger targets than it would be able to accommodate individually with equity cheques of up to £150 million, per a Tuesday statement. All of its capital was committed by existing LPs.

“Belay will be used for follow-on investing… where we see more inorganic opportunity than originally thought, and specifically for larger investments and/or secondary buyouts with more limited rollover/reinvestment from the management team when compared to re-investing founders,” co-founder

Guy Gillon told PEI. “Belay wasn’t premeditated. We responded to current market and fund dynamics.”

PE firms more broadly have been getting creative with fund structures recently in a bid either to hold onto prized assets for longer or double-down on those in which they has high conviction. Venture giant Insight Partners, for example, is seeking $1.25 billion for the Insight Venture Partners X Follow-On Fund, which will make primary and secondary investments in portfolio companies held by 2017-vintage Insight Venture Partners X, affiliate title Buyouts reported. The firm is understood to have deployed Fund X quickly with not much in reserve to invest into subsequent funding rounds.

LGT’s Middle East hire
Fund of funds giant LGT Capital Partners has appointed a former Amundi director to lead its Middle East business, per a Tuesday statement. Wael El Burji joins as managing director and senior executive officer in Dubai. He previously led Amundi’s third-party distribution in the region, managing its relationship with sovereign wealth funds, pensions and other institutions.


Hunter bags Hibberd
Hunter Point Capital, the GP stakes firm started last year by GSO Credit (now Blackstone Credit) founder Bennett Goodman, has recruited former Blackstone executive Melvin Hibberd as managing director, per a Monday statement. Hibberd, who most recently served as a managing director in Blackstone’s GP stakes business, will lead Hunter Point’s investment team upon arrival in January. He spent seven years with his former employer and previously served at KKR and Goldman Sachs. His new firm seeks minority stakes in mid-market PE, credit, real estate and infrastructure managers globally. More details on Hunter Point here.

Eggs? Check. Milk? Check. PE? Check
At a time when PE is rushing to get into UK shopping chains, a family office linked to one of the country’s biggest supermarket fortunes is pivoting towards alternativesInnotech Advisors – managed by David Sainsbury, great grandson of the founder of the UK’s second-largest supermarket chain J Sainsbury – plans to pump another £253 million ($336 million; €298 million) into PE funds, Bloomberg reports. Innotech sold all of its shares in the listed shopping chain between 2011 and 2018, increasing its PE investments by 40 percent over the same period. The London-based institution had more than £400 million allocated to funds at the end of last year, when its investments had a market value of £1.1 billion.

Dig deeper

Institution: Maryland State Retirement and Pension System
Headquarters: Baltimore, US
AUM: $66.7 billion
Allocation to alternatives: 29.3 percent

Maryland State Retirement and Pension System has recently disclosed $499 million in private equity commitments, following its September and October board meeting documents.

The commitments consisted of $300 million to Voya MSR Opportunities Fund I, $100 million to Clearlake Capital Partners VII and $70 million to Baring Asia Private Equity Fund VIII. A co-investment was made of $15 million to Bain Capital Fund XIII and $14 million associated with Great Hill Equity Partners VII.

The funds are managed by Voya Investment ManagementClearlake Capital GroupBaring Private Equity AsiaBain Capital and Great Hill Partners, respectively. The pension has previously committed capital to the Bain and Great Hill funds: $150 million to Bain Capital; and $100 million to Great Hill in 2020.

Maryland State Retirement currently allocates 16 percent to private equity, exceeding its target of 13 percent. The pension fund continues to make commitments globally, predominately focusing on venture capital and growth equity strategies.

For more information on Maryland State Retirement, as well as more than 5,900 other institutions, check out the PEI database.

Today’s letter was prepared by Alex Lynn with Rod James and Michael Baruch.

– This article was updated to reflect that Tenzing’s fund closed on £100 million rather than £150 million.