The number of searches during the fourth quarter of 2023 decreased to 88 from 93 in the prior quarter, with 55% for service providers, followed by 23% for traditional managers and 15% for alternatives. The number of traditional searches decreased to 20 from 30 in the prior quarter, which included Illinois Firefighters’ Pension Investment Fund’s $240 million emerging market fixed-income manager search as well as Los Angeles Water & Power Employees’ Retirement Plan’s $377 million active unconstrained global equity manager search. There were 48 service provider searches this quarter — 30 for consultants, nine for record keepers, and the other nine for legal, custodian, actuarial, proxy and governance professionals.
Notable activity for the quarter included a $377 million active unconstrained global equity manager search conducted by Los Angeles Water & Power Employees’ Retirement Plan as a result of an increase in the unconstrained global equity target allocation to 10% from 6%. Boston Partners currently manages $433 million in an unconstrained strategy, and its portfolio exposure will be reduced to $377 million and an equivalent amount will be run by the new manager.
Illinois Firefighters’ Pension Investment Fund is searching for managers to manage a $150-250 million diversified Private Equity Secondaries portfolio with a target private equity allocation of 10% and an actual exposure of 0% as of June 2023. Separately, the retirement fund is searching an active emerging market debt manager to manage a $240 million portfolio with a 7% target private debt asset allocation.
Chicago Public School Teachers’ Pension & Retirement Fund issued a $350 million diversifed evergreen private credit manager search as a result of a new 3% target allocation being created and a tactical shift from international equity to private credit. Boston Retirement System is searching for a private equity manager to manage a $400 million portfolio with the focus on buyout, growth equity and venture capital strategies.
All information is based on transactions reported by Pensions & Investments’ global reporting staff and RFP advertisements.”
Hiring activity skyrocketed to $134.6 billion from $58.4 billion in the previous quarter, mostly due to the shift in traditional hires to $67.6 billion from $6.8 billion as well as the significant jump of real assets hires to $34.5 billion from $4.3 billion. The overall alternatives hires also increased sharply to $67 billion from $35 billion in the prior quarter. The overall number of hires increased slightly to 464 from 418, mostly driven by increasing alternatives and private equity hires. The number of real estate hires increased to 53 from 41, while traditional hires climbed to 59 from 41 in the prior quarter.
The United Arab Emirates awarded $25 billion and $5 billion to Lunate Capital’s two new climate finance funds Alterra Acceleration and Alterra Transformation, respectively, to attract international capital and to preserve capital needed for the global climate investment at scale, respectively. Alterra will partner with BlackRock, Brookfield and TPG to help finance the money flow that’s needed to reduce emissions to meet the Paris Agreement.
Etablissement de Retraite Additionnelle de la Fonction Publique, with $40.8 billion in assets, hired 10 managers to run eurozone, Europe and Japan equities with allocations made across six passive or active portfolios. Out of 10 managers hired, Amundi was awarded two mandates totaling $8.8 billion; one for its eurozone passive equity strategy replicating the MSCI European Economic and Market Union-based ERAFP SRI index and one for an active euro-dominated credit strategy that primarily invest in noninvestment-grade bonds, private debt funds or European securitization securities. BlackRock France received a $6 billion mandate for its eurozone passive equity strategy benchmarking against SciBeta Eurozone SRI CRB-efficient MSR CTB index. Lazard Freres Gestion was hired to manage a $4.6 billion active eurozone mid- and large-cap equity portfolio. Kellogg Brown & Root hired Legal & General Investment Management as OCIO manager for its $1.3 billion U.K. pension fund assets.
Pennsylvania Public School Employees’ Retirement System hired NISA Investment Advisors to manage $2.5 billion of its strategic implementation portfolio, which is designed to manage liquid markets exposure with strategies including total return index swaps. Texas Municipal Retirement System committed a total of $3.1 billion in the quarter and hired Northern Trust Asset Management to manage its $1.7 billion core fixed income portfolio after it adjusted its target allocation to 6% from 4.4%.
CVC Capital Partners IX received five commitments totaling $1.5 billion from organizations including Canada Pension Plan Investment Board and Japan Government Pension Investment Fund for its shared-control buyouts across industries primarily in Europe and the Americas. In total, Canada Pension Plan Investment Board disclosed $1.67 billion in investments during the quarter. Japan Government Pension Investment Fund committed $3.15 billion this quarter, with $1.7 billion invested in buyout funds including Hellman & Friedman Capital Partners XI, CVC Capital Partners IX and EQT X.
CalPERS recently committed a total of $4.7 billion, and hired money managers including Blackwell Capital Partners, Valor Equity Partners and Genstar Capital to manage its $2.9 billion private equity portfolio. Separately, CalPERS committed $1.3 billion to Ares Capital Europe VI. Brookfield Asset Management and IFM Investors received $250 million and $100 million commitments each from CalPERS.