Washington State commits $900m to private equity

The State Investment Board committed to Permira Fund V and to TPG’s interim buyout fund.

The Washington State Investment Board approved up to $900 million in commitments to two private equity funds Thursday, according to an email from a board spokesperson.

Washington State committed up to €220 million to Permira’s Fund V, which has been in market since in September 2011, and up to $600 million to TPG’s interim buyout fund, Capital Partners Strategic Account, which will serve as a bridge fund between the expiration of TPG VI and the activation of TPG VII. 

Permira had originally aimed to raise €6.5 billion for Fund V, but the firm scaled the target back to between €4 billion and €5 billion in January 2013. Fund V held a first close on €2.2 billion, including a €200 million general partner-commitment, last April, Private Equity International previously reported. The fund will invest in mid- and large-cap European companies in the technology, healthcare and financial services sectors.  

Limited partners in Fund V include the Canada Pension Plan Investment Board, the Florida State Board of Administration and The University of Michigan Board of Regents, which committed €15 million Fund V, according to PEI’s Research and Analytics division.

Fundraising for Fund V has been challenging in part because Permira’s prior fund suffered from a series of write-downs after the financial crisis, PEI previouslyreported. Permira offered early-bird discounts to LPs willing to commit before Fund V held its first close. Permira’s Fund IV closed on €11.6 billion in 2006, before being revised down to €9.6 billion. Washington State committed €100 million to the fund.

TPG’s interim buyout fund is expected to raise between $1.6 billion and $2 billion, PEI previously reported. The interim fund allows TPG to continue investing after its $19 billion Fund VI has been deployed. Fund VI received a one-year fund extension in August 2013 to end its investment period in February 2015. TPG needed at least two thirds of the LPs in the fund to approve the extension, which dictated that TPG will offset the management fee with 100 percent of any transaction fees on deals done during the extension period. Fund VI’s original transaction fee offset was 65 percent.

TPG’s Fund V began investing in 2006 and has been plagued by a number of troubled investments, including Energy Future Holdings, which suffered from the collapse of US natural gas prices, and hotel and casino company Harrah’s which was negatively impacted by a multi-year decline in the gaming industry, according to documents from the Oregon Investment Council.

Washington State has been longtime investor in TPG funds, having committed more than $2 billion to seven TPG vehicles since 2000.