Side Letter: TA’s $1.5bn cure for separation anxiety; Eaton’s Shanghai shake-out

TA Associates has gathered a whopping $14 billion, of which $1.5 billion will enable the firm to hold assets for longer. Plus: Eaton Partners has lost its senior executives in mainland China and LACERS plans to reach a wider set of emerging managers. Here's today's brief, for our valued subscribers only.

They said it

“You don’t want to get into a world where the unvaccinated are treated as the lepers of the workplace”

Barry Hartstein, a shareholder at employment law specialist Littler, tells affiliate title Regulatory Compliance Watch that he opposes mandatory vaccinations for staff returning to the office (registration required)

Just happened

TA’s cure for separation anxiety
Another megafund has just closed, with growth equity giant TA Associates saying this morning it has reached the $12.5 billion hard-cap for TA XIV, which launched in January with a $10.5 billion target. Fund XIV is about 47 percent larger than its 2019-vintage predecessor.

What caught our attention more so was that TA also gathered $1.5 billion for Select Opps II, its latest vehicle designed to re-invest in certain portfolio companies the firm is exiting. In these instances, TA’s main fund would be likely to retain a minority stake, with the Select Opps vehicle co-investing alongside the third-party buyer. Its 2019-vintage Select Opps I raised $1 billion from the likes of Alaska Permanent Fund and California State Teachers’ Retirement System, according to PEI data.

Such vehicles play into GPs’ growing desire to own choice assets for longer, with managers increasingly rethinking fund terms during the pandemic to provide more flexibility around holding periods and capital use.

Eaton less
More seismic moves for Eaton Partners in Asia: the placement firm’s last two senior executives in Shanghai, directors Xiaoyan Shu and Haw Rer Au Yong, departed this year, PEI reports this morning. Their exits followed those of Asia head Chris Lerner and HK head Jackson Chan last year.

Eaton is not alone in shedding staff during the pandemic. A host of regional placement agents have moved in-house over the past 18 months as the coronavirus has slowed new fundraises and lowered the opportunity cost.

Investcorp to de-list
Just as Side Letter was going to press came the news that Investcorp has decided to de-list from the Bahrain Bourse. Becoming a private company is the “most appropriate ownership structure” at this stage of Investcorp’s journey and will allow the firm’s senior leadership team to be “dedicated to driving growth”, Mohammed Alardhi, executive chairman, said in a statement. The de-listing is expected to occur in the third quarter of this year.

LACERS gets inclusive
The $21 billion Los Angeles City Employees’ Retirement System has tweaked the parameters for its emerging manager programme, per a draft of the policy on its website. Here are some takeaways:

  • The new policy adds third-time vehicles and widens the scope of fund sizes allowed in the programme. First-time funds are capped at $750 million, second-time funds at $1 billion and third-time funds at $1.25 billion.
  • It has raised the higher commitment limit for second- and third-time funds to 20 percent of the projected final vehicle size, or $40 million – whichever is smaller.
  • It will start using an “organisation diversity survey” to measure the demographics of firms responding to requests for proposals and getting contracts. However, under California state law, the information cannot be provided to staff or the board until after commitments have been made.


Haynes’ gains
Luminate Capital Partners, the buyout shop launched by ex-Silver Lake veteran Hollie Haynes, has closed its third fund at its $1 billion hard-cap (press release here). The San Francisco-based firm had been seeking $700 million for the vehicle, as PEI reported in September. Haynes has come a long way since receiving her first LP rejection in 2015 – a process she talked us through in our December Deep Dive.

Dig deeper

Institution: Minnesota State Board of Investment
Headquarters: St Paul, US
AUM: $82.14 billion
Allocation to alternatives: 15.8%

Minnesota State Board of Investment committed $750 million across four private equity vehicles, according to a memorandum detailing the outcome of its May investment board meeting. The commitments, made to the institution’s existing managers, comprised $300 million to Blackstone Capital Partners Asia Fund II and $150 million each to KKR MSBI PartnershipTPG Tech Adjacencies II and TPG Growth V.

The KKR MSBI Partnership is designed for Minnesota SBI to co-invest in specific investments made by KKR in which the organisation is also a limited partner.

As illustrated below, Minnesota SBI allocates 9.5 percent of its investment portfolio to private equity. Its recent commitments to private equity have employed a wide range of strategies across multiple sectors.

For more information on Minnesota SBI and more than 5,900 other institutions, check out the PEI database.

Today’s letter was prepared by Alex Lynn and Adam Le