Nystrs considering further European fund commitments

"We have some European opportunities in our pipeline that could potentially be added," Nystrs spokesperson John L Cardillo told Unquote following a recent quarterly update to 30 June 2018.

The US pension fund has increased the number of active partnerships in its private equity portfolio, amounting to 226 partnerships across 95 sponsors as of June 2018. The scheme had 213 fund investments managed by 89 GPs as of December 2017. Cardillo says the increase in partnerships is simply a function of the opportunity set, and that there are more relationships to be added over the next period. 

Investments in leveraged buyouts and management buyouts dominate the private equity portfolio, which consists of 61% LBO/MBO, 13% funds-of-funds, 9% co-investments, 7% secondary funds, 8% venture capital and 3% turnaround, in terms of market value. Cardillo says the pension scheme will continue to go forward by having most of its PE allocation to LBO/MBO funds.

Nystrs also announced it currently has $20.9bn in active commitments, including $7.9bn in market value and $5.7bn in unfunded commitments. The scheme has allocated 6.8% of its portfolio to private equity as of March 2018, and its target allocation is 8%. From inception to March 2018, the private equity portfolio has generated a net IRR of 12.3%.

The pension scheme used to make its private debt investments from its private equity allocation. However, the scheme created a private debt portfolio in July 2018, so the assets moved to the new portfolio.

Nystrs has recently committed $80m to SK Capital Partners V, $92m to Inflexion Buyout Fund V, and $92m to Inflexion Partnership Capital Fund II. Other recent investments include commitments to Capvis Equity V and IK Small Cap II.

Nystrs has also approved a commitment to invest up to $300m in Hellman & Friedman Capital Partners, a business operating in Europe and North America. However, the report indicates that it is still pending approval.

The pension fund invests primarily through funds. However, it also has a co-investment programme with Harbourvest, which co-invests on a global basis alongside a subset of GP relationships.

In terms of environmental, social and governance issues, Cardillo says: "ESG is important to Nystrs in general, and is a consideration, but the primary driver of investment decisions are returns."

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