Hartford HealthCare, Hartford, Conn., is anchoring a new fund managed by Xponance that will seed alternative investment funds managed by diverse managers, said David J. Holmgren, chief investment officer.
The non-profit organization is committing $50 million to the Xponance Diverse Opportunities Fund, which plans to raise a total of $400 million, Mr. Holmgren said.
The fund will primarily focus on providing seed and staking capital (minority interests) to diverse, emerging and women-owned alternative investment management firms, according to Xponance, in an email from the manager forwarded by Mr. Holmgren. It plans to take about 10 stakes of between 5% and 20% in minority-owned general partners consisting of three sleeves: One consists of co-investment rights in qualified diverse GPs (about 42% of the fund), another of staking and seeding of diverse and emerging managers GPs (33%), and one consists of limited partner commitments to individual sponsors and capital providers to both diverse and non-diverse GPs (25%).
Hartford HealthCare's commitment will be allocated to its combined $4 billion pension fund and endowment pool's inflation-protected/economic hedged assets portfolio. Its target is 15%.
Mr. Holmgren said in an interview that the commitment represents a new asset class type that reflects his organization's desire to be a complete actively managed performance-based portfolio. He noted the portfolio's return for the fiscal year ended June 30 was 34%.
"We don't have any passive instruments in the portfolio at all," Mr. Holmgren said. "We're not index. We're not beta players. We're total believers in active."
"On the staking side, and you'll know all the stake platforms, and there's some real good ones. They're phenomenal shops," Mr. Holmgren said. "They're great, great organizations, but that to me is a form of passive. They're literally providing staking capital to the general partners to monetize. It's a liquidity event."
"What we've demonstrated over the years is we're actively managed. We're not a provider of capital," he said.
Mr. Holmgren noted that the organization is solely interested in value-added funds.
"We're not just providing money," he said. "This is highly active. This is accelerator capital. We're not coming because the GP is exiting. We're coming because the GP is growing. This is the kind of 'value add' which totally culturally aligns with how we invest."
