The chairman of the New Jersey State Investment Council says the state Treasury Department should prepare a plan by late July to address a controversial private equity investment made by the department's division of investment for the $79.2 billion New Jersey Pension Fund, Trenton.
“We want this finalized by the next investment council meeting July 22,” Chairman Brendan Thomas Byrne Jr. said in an interview May 29, referring to a $50 million investment made by the division in 2005 with JLL Partners Fund V, a middle-market buyout fund managed by JLL Partners.
The private equity firm used assets in JLL Partners Fund V in October 2006 to acquire Ace Cash Express Inc., a payday lender. Payday lending — short-term high interest-rate loans — is prohibited in New Jersey.
On May 27, the council asked Christopher McDonough, the division director, to consider options for the pension fund's investment in the fund. The State Investment Council develops policies governing the investment of funds by the division of investment and consults with the division director about division activities.
Mr. Byrne said council members would like the division to divest its holdings in JLL Partners Fund V, which he said had been profitable. He didn't provide details.
If the division sells its investment on the secondary market, “we would want to do it without affecting the beneficiaries” of the state pension fund, Mr. Byrne said.
Christopher Santarelli, a Treasury Department spokesman, said in an e-mail May 29, “there is not a formal review” of the JLL investment. He said Mr. Byrne directed the division “to explore various options for dealing with this situation and for guarding against future similar situations.”
Mr. Santarelli declined further comment. He wouldn't discuss whether the division's review would encompass a $150 million commitment made in January to JLL Partners Fund VII, another middle-market buyout fund managed by JLL Partners.
The commitment to JLL Partners Fund VII “is not legally closed,” said Mr. Byrne, adding that commitment “will be part of the conversation.”
William Miles, a JLL Partners managing director for investor relations, declined to comment May 29.
Another investor in JLL Partners Fund V was the New York State Teachers' Retirement System, Albany, which invested $50 million. John Cardillo, a spokesman for the $109.2 billion pension fund, didn't return calls for comment. Payday lending is prohibited in New York.
