New Jersey earmarks $700 million for private equity, real estate

The New Jersey Division of Investment committed up to $700 million in private equity and real estate funds for the $68.1 billion New Jersey Pension Fund, Trenton, confirmed Christopher Santarelli, a spokesman for the state Treasury Department.

The division announced the commitments Wednesday at a meeting of the State Investment Council, which formulates policies governing the division’s investments for the pension fund. The division is a unit of the state Treasury Department.

The largest commitment was up to $500 million for funds managed by Vista Equity Partners, composed of up to $200 million to Vista Equity Partners VI, a middle-market buyout fund concentrating on the software industry; $200 million for a related co-investment separate account; and $100 million to Vista Foundation Fund III, which focuses on lower-middle to middle-market software companies, according to a report by the division.

The pension fund has made commitments to four previous Vista funds.

The division also announced a $100 million commitment to the Wheelock Street Real Estate Fund V, managed by Wheelock Street Capital. The fund will invest in individual properties, portfolios and operating companies. The division has made commitments to two other Wheelock funds and a co-investment vehicle.

Also in real estate, the division committed $100 million to Exeter Core Industrial Club Fund II, an industrial real estate fund managed by Exeter Property Group. It previously committed to an Exeter fund in 2012.

The division also reported that it had made two redemptions citing “portfolio rebalancing needs” for both transactions.

It submitted a full redemption notice on Feb. 3 for Protege Partners QP Fund and Protege Partners, for which the division had a combined $176 million invested as of Jan. 31. “Protege is a fund-of-funds (manager) that specializes in emerging managers with a focus on event-driven and long/short equity hedge fund strategies,” a division report said.

The division also submitted a partial redemption request of $50 million for the Brevan Howard Fund Ltd. for April 30. As of Jan. 31 the division had about $307 million invested in the fund. A division report described Brevan Howard as applying “a fundamental global macro strategy that trades predominately global fixed income and foreign exchange markets.”

Separately, the division reported the New Jersey Pension Fund returned -6.61% for the first eight months of the fiscal year ended Feb. 29, compared to -5.67% for the customized benchmark.

The division reported that it is reviewing its asset allocation strategy for the fiscal year that will start July 1. The state investment council must approve the strategy, and a final vote is scheduled for May.

One division suggestion is to stop investing in commodities for the next fiscal year. Commodities currently account for $395 million, or 0.58%, of pension fund assets. “The benefits of diversification may decline for commodities,” a report said. “Inflation hedging is less important. Real assets are a more attractive means of gaining commodity exposure vs. direct investment.”