Washington State boosts Southern Cross exposure

After being unable to allocate its full $100m commitment to Southern Cross’s most recent Latin American fund, the $78bn retirement system increased its exposure to the fund through the secondary market.

The Washington State Investment Board followed up on its 2010 commitment to Southern Cross Latin American Private Equity Fund IV with a secondary purchase, tacking an additional $4 million onto its original $75 million commitment.

The board committed up to $100 million to Southern Cross last September, but was ultimately only able to allocate $75 million due to strong investor interest in the fund, spokesperson Liz Mendizabal said.

Southern Cross closed on its fourth Latin America fund last year, raising $1.68 billion on a $1.25 billion target thanks to a “very high percentage” of returning investors, a source familiar with the matter told Private Equity International. The fund will focus on $100 million to $300 million investments in Latin America’s consumer sector.

The $78 billion retirement system has a history of secondary investing, having taken secondary positions in Phoenix Partners, Warburg Pincus International Partners and Francisco Partners. Washington State’s active investments as a secondary investor amount to a little less than $21 million as of 30 June, according to documents from the Washington State Investment Board.

WSIB includes the strategy in its investment policy, stating that it is developing its secondary capabilities to enhance its ability to minimise losses and maximise gains by entering the market as either a seller or opportunistic buyer.

Washington State has been an active investor in private equity this year, committing up to about $2.2 billion to the asset class. At its November meeting, the board made a €222 million re-up to Apax Partners’ eighth fund, as well as a $250 million commitment to Actis Global IV.

The retirement system has nearly 20 percent of its assets, $15.6 billion, committed to private equity as of 30 September, according to its website. Washington launched its private equity program in 1981.