NYSTRS confirms $100m commitment to CVC Asia fund
New York State Teachers’ Retirement System (NYSTRS) has confirmed a $100 million commitment to CVC Capital Partners’ fourth Asia buyout fund.
It was one of seven new commitments the system made during the first quarter of 2014, taking it to 177 active partnerships across 80 PE and VC firms, according to a disclosure. Active private equity commitments totaled $16.5 billion while the portfolio had a market value of $7.8 billion.
CVC launched its fund last year with a target of $3 billion and a hard cap of $3.5 billion, including a $200 million GP commitment. Industry sources suggest the vehicle will close above its hard cap.
The fund will pursue deals of $60-300 million in Greater China, Japan, South Korea and Southeast Asia. The target return is 20-30% gross IRR and a gross multiple of 2-3x.
Other LPs that have disclosed commitments include Japanese financial institutions Sumitomo Mitsui Trust Bank, Japan Bank for International Cooperation, and US pension funds Pennsylvania Public School Employees' Retirement System (PSERS) and Teachers' Retirement Systems of Louisiana.
CVC's first Asia fund, a 2000 vintage vehicle with a corpus of $750 million, delivered a net IRR of 31.4% and a net multiple of 2.2x. Fund II was problematic, receiving commitments of $1.9 billion in 2005 but the net IRR stands at -9.6% and the net multiple at 0.6x.
CVC closed Fund III at $4.2 billion in 2008 and it has so far delivered a net IRR of 16.1% and a net multiple of 1.5x.
As of June 2013, NYSTRS had $93.2 billion in total investments, with private equity sitting just over one percentage point above its target allocation of 7%. Alternatives as a whole accounted for 9.5% of the portfolio.
According to AVCJ Research, the CVC fund represents the system's third commitment to a dedicated Asia vehicle. In 2013, it agreed to invest $65 million in KKR Asian Fund II, which subsequently closed at $6 billion, and $100 million to Carlyle Asia Partners IV, which is still in the market seeking around $3.5 billion.
Excluding global funds that invest in Asia, NYSTRS' regional exposure is largely focused on HarbourVest Partners' co-mingled vehicles, including HarbourVest International PEP VI - Asia Pacific Fund and HIPEP Select Asia Fund.
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