Washington State pledges $750m to Warburg

The $78bn pension system has committed over $3bn across six funds to Warburg since 1994.

The Washington State Investment Board has made a blockbuster commitment of up to $750 million to Warburg Pincus’s 11th flagship fund, matching their commitment to the firm’s last fund, according to spokeswoman Liz Mendizabal

The latest re-up brings Washington’s overall commitment to the firm to more than $3 billion, according to pension documents. The $78 billion pension system has invested in six of Warburg’s previous funds, including three of its flagship funds.

The firm is reportedly rewarding limited partners who bet big on Fund XI. Commitments of $200 million or more will pay a 1.3 percent management fee for the first six years after closing, according to a Wall Street Journal report. Other investments will be charged a 1.4 percent management fee during that period.

Warburg Pincus Fund X raised $15 billion in 2007. The fund was netting an internal rate of return of 3.69 percent and a total value multiple of 1.1x as of 30 June, according to Washington State documents.

The firm engages a variety of strategies with its investments, typically focusing on the consumer, industrial and services, energy, financial services, healthcare, real estate, technology, media and telecommunications sectors.

Warburg could not be reached for comment.

Washington also committed $200 million to Denham Capital, which is targeting $2.5 billion for its sixth energy and commodities-focused fund. Denham held a first close on the fund in late October and had collected $1.7 billion as of late November. The fund is already “over-subscribed”, according to a person with knowledge of the fund. The next close on Fund VI is scheduled for February, which could be the final close, according to one person.

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 programme in 1981.