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New Jersey commits $307 million to 2 managers; head of alternatives departs

The New Jersey Division of Investment, which manages investments for the $71.6 billion New Jersey Pension Fund, Trenton, committed up to $307 million to two private equity funds, confirmed Willem Rijksen, a spokesman for the state Treasury Department.

The division committed up to $200 million to the Neuberger Berman New Jersey Custom Fund III, which will “invest opportunistically” throughout the world in areas such as “buyouts, growth and special situations,” said a report by the division presented Wednesday at a meeting of the State Investment Council. The council formulates investment policies for the division, which is a unit of the Treasury Department.

The division has been investing with Neuberger Berman's private equity business since 2007, the report said.

The division also made a €100 million ($107 million) commitment to CVC Capital Partners Fund VII. The fund focuses on “control-oriented opportunities” primarily in Europe but also in the U.S., the report said. New Jersey has invested previously with CVC Capital Partners.

Separately, the division announced it would not invest in EQT Infrastructure III. “After extensive negotiations, the division and the fund were unable to reach agreement on the terms of the legal documents” governing the investment, the division report said. The division previously had announced a $100 million commitment, pending contract negotiations

The report also noted that during the first two months of 2017, the division had received redemptions of $900 million in equity-oriented hedge funds and $130 million in credit-oriented hedge funds as part of its effort to reduce exposure to hedge funds.

Hedge funds represented 11.2% of total pension fund assets as of Sept. 30 and they have declined to 9% at the end of February. The division predicted hedge funds will account for 8.6% of pension fund assets by June 30 and 7.4% by year-end as more redemptions are received. The long-term goal is 6%.The division didn't cite specific redemptions, although it previously has identified hedge funds to which it has sent notices for full or partial redemptions. “Net sales of public equities and redemptions from hedge fund strategies increased the overall allocation to cash in the midst of a move to higher financial market valuations,” the division report said. Cash equivalents represented $2.95 billion, or 4.1% of assets, as of Feb. 28.

The division also announced that Meghna Desai, head of alternative investments, resigned March 17, to join NewYork-Presbyterian Hospital as director of investments on April 10. The investment office oversees $8.5 billion in short- and long-term assets.

Ms. Desai was promoted to head of alternative investments at New Jersey in September, although she had taken on additional responsibilities following the June 2016 departure of Jason MacDonald to become investment director at Rutgers University, New Brunswick, N.J.

Samantha Rosenstock, a portfolio manager, is now the interim head of alternative investments, Mr. Rijksen confirmed in an email.