UN pension backs Centerbridge and Lexington

The $43bn United Nations Joint Staff Pension Fund carved out a 6% allocation to private equity last year and has made its first commitments to big funds this summer.

A new pool of capital has emerged on the private equity landscape.

The United Nations, which has been developing its debut private equity programme over the past year, recently made its first commitments to large funds, allocating $75 million to Lexington Partners and $65 million to Centerbridge Partners, sources told Private Equity International.

The United Nations Joint Staff Pension Fund made the commitments in June to Lexington’s seventh secondaries fund, which closed on $7 billion in July, and Centerbridge’s second fund, which recently closed on about $4.4 billion. The pension also committed $25 million to Orchid Asia’s fifth fund, which closed on its hard-cap of $650 million in July.

With about $43 billion in assets, the pension has a 6 percent allocation target to private equity. The allocation was carved out last year, and the pension fund made its first ever private equity commitment — $150 million — to the International Finance Corporation-sponsored African, Latin American and Caribbean Fund.

A specific business plan for private equity has not yet been created and the pension declined to comment on how much it wants to commit this year. The pension will be looking “opportunistically” for managers in strategies like buyouts, growth capital, secondaries and emerging markets, among others, according to a source close to the pension.

The pension fund was authorised by the UN Secretary General in consultation with the investment committee, the pension board and the General Assembly in 2009 to begin investing in private equity and hedge funds. The pension had been exploring various alternative asset classes since 2008, according to a statement from the pension.

Private equity at the pension is overseen by Tereza Hesounova Trivell, who spent more than 11 years at fund of funds Siguler Guff. Trivell, senior investment officer in alternative investments, joined the pension in June 2010 and began building up the programme.

The pension is hiring a consultant to advise on private equity through a competitive bidding process for a non-discretionary mandate. The pension would not comment on candidates or a timeline for the process.

Interestingly, managers the pension commits to do not have to be signatories with the UN’s Principles for Responsible Investment, though it is recommended, according to a person with knowledge of the situation. Centerbridge and Lexington are not included on the UN’s signatories list on the web site.

Private equity firms have in the past few years been signing onto the Principles, which were launched in 2006 and outline a set of best practices in environmental, social and governance issues. Firms like First Reserve, AXA Private Equity, Kohlberg Kravis Roberts, Pantheon, Partners Group and Abraaj Capital have signed onto the principles.