Side Letter: SWFs tech hungry, LPs bearish on returns, Church of England’s faith

Sovereign wealth funds up direct unlisted investments, LPs say competition will drive returns lower, Church of England keeps the PE faith. Here’s today's brief, for our valued subscribers only.

Just happened

SWFs are the new VC pros

Sovereign wealth funds have been coming up with more structured ways to get into tech investing, says industry body the International Forum of Sovereign Wealth Funds. Direct unlisted investments made by SWFs rose 17 percent to 147 deals last year, mainly driven by $3.4 billion worth of tech deals. Sovereigns are also getting in early, doubling their early stage commitments year-on-year. Who’s doing the buying? Alaska Permanent Corporation, Singapore giants GIC and Temasek and Australia’s Future Fund, the report says.

LPs bearish on PE returns

Institutional investors are anticipating diminished future returns amid growing concern over competition for assets, according to a survey from eVestment. More than half of respondents expect performance to decline over the next three years, while only 12 percent believe returns will improve. Competition for deals was the biggest worry – a stark change from last year when it was the fourth-highest concern. GPs: prepare an answer for how you deal with competition at that upcoming AGM.

CoE puts faith in PE

Church Commissioners, the Church of England’s £8.2 billion ($10 billion; €9 billion) asset management arm, has increased its PE allocation to 6.1 percent. This is up from 4.7 percent the previous year, according to its latest annual report. Its conviction has been well rewarded: private equity returned 23.8 percent last year, second only to strategic land investments at 29.2 percent. Church Commissioners is looking for more impact investments and appointed an analyst last year to help it find opportunities, the report notes.


No bail for Naqvi. Abraaj Group founder Arif Naqvi remains in prison despite being granted bail in late April. He has yet to gather the £15 million ($19 million; €17 million) security, London’s Westminster Magistrates Court heard on Friday. Naqvi is facing extradition to the US on charges of fraud, alongside former colleagues Mustafa Abdel-Wadood and Sev Vettivetpillai. A case management hearing is scheduled for 12 June.

KKR cuts loose. KKR has become the latest financial behemoth to relax its dress code, joining the likes of Goldman Sachs, JP Morgan and BlackRock, according to the WSJ (paywall). Business casual is fast becoming acceptable on Wall Street as investment banks and private equity shops battle to attract top tech talent, who – if Mark Zuckerberg’s t-shirt-and-hoodie combination is anything to go by – tend to dress for comfort.

‘House Investcorp’. Gulf investor Investcorp continued its shopping spree, adding placement agent and advisory Mercury Capital Advisors to its portfolio. The deal has been “brewing for a while”, Alan Pardee, Mercury co-founder tells PEI. We reckon Investcorp is one to keep your eye on: the firm has an ambitious target of more than doubling its AUM to $50 billion in the near term and has been building its PE portfolio over the last few years via Asian deals as well as advisory and merchant banking partnerships.

LP meetings. Here are some LP meetings to watch out for this week:

Dig deeper

Maryland commits. Maryland State Retirement and Pension System has approved $300 million in private equity commitments, including a whopping $200 million to preferred equity specialist Whitehorse Liquidity Partners’ third fund. To find out more about the $53 billion fund, as well as 6,700 other institutions, check out the PEI database.

She said it

“What is the purpose of the industry? Is it to make those who work in it rich – or is it actually to make the final beneficiaries better off and improve their wellbeing?”

Luba Nikulina, head of manager research for pensions advisor Willis Towers Watson, warns fund managers to reform their culture in an interview with the FT.

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Today’s letter was prepared by Toby MitchenallAdam LeCarmela MendozaRod James and Alex Lynn.

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