Washington State commits $400m to PE and VC

The State Investment Board committed to two private equity funds and one venture capital fund.

The Washington State Investment Board has committed $400 million to three funds, according to a spokesperson from the pension.

Washington State committed up to $200 million to FFL Capital Partners Fund IV, which represents a new relationship for the pension. FFL Fund IV launched last year with a $1.5 billion target and has collected more than $1 billion, according to a source with knowledge of the situation. FFL’s prior fund was raised under the firm’s former name Friedman Fleischer & Lowe and closed on its $1.5 billion target in 2007. The San Francisco-based firm invests in mid-market companies in North America.

FFL declined to comment.

Washington State also committed $100 million each to The Banc Funds Company’s Fund IX and Menlo Ventures’ Fund XII, according to the spokesperson.

Banc Fund IX is targeting $600 million, according to documents filed with the US Securities and Exchange Commission Monday. The Chicago-based firm focuses on the banking sector and will make minority stake investments of less than 10 percent per deal. Washington State has invested in four prior Banc funds, including committing $85 million to Fund VIII in 2008. The vehicle was generating a net internal rate of return of 14.16 percent and a return multiple of 1.3x as of 30 September 2013, according to Washington State documents.

The pension also committed about $32 million to Banc Fund VII in 2005, $30 million to Fund V in 1998 and $20 million to Fund IV in 1996, according to the spokesperson.

Menlo Ventures represents Washington’s longest standing private equity relationship. Fund XII launched earlier this year with a $400 million target, the same size as its prior fund. Fund XI launched in 2010 and also received a $100 million commitment from Washington State, according to Private Equity International's Research and Analytics division. Fund XI was generating a net IRR of 17.69 percent and a net return multiple of 1.2x as of 30 September, according to Washington State documents. Menlo Ventures’ 2001 and 2006 vintage funds closed on $1.5 billion and $1.2 billion, respectively, according to PEI data.

Menlo makes seed investments up to $250,000 and late-stage investments more than $30 million. Portfolio companies include mobile fashion marketplace Poshmark and video monitoring company Dropcam, according to its website. Washington State has invested about $684 million in Menlo Ventures’ funds since 1981, according to the spokesperson.

At the end of February, Washington State approved commitments of up to €220 million ($304.2 million, £181 million) to Permira Fund V and up to $600 million to TPG’s interim buyout fund, which is a bridge vehicle between the expiration of TPG VI and the activation of TPG VII, PEI reported.

Washington State has a 25 percent target allocation to private equity and a 23.8 percent actual allocation as of 30 June 2013, according to pension documents. The pension has $98.1 billion of assets under management as of 31 December 2013, according to its website.