MBK wins US pension support for Asia fund

NYSCRF will invest $65 million in MBK Partners Fund V through a separately managed account with Asia Alternatives. It put $50 million into the GP's previous fund through the same channel. NYSCRF also announced a $400 million commitment to SSG Capital Partners, divided equally between the Asia special situations manager's core and sidecar vehicles. SSG was recently acquired by Ares Management.

NYSTRS and LACERA are re-upping with MBK as well. The former will contribute up to $150 million to Fund V, having invested $100 million Fund IV, while the latter is looking to up its commitment from the previous vintage from $120 million to $150 million. LACERA also invested $100 million in MBK's third fund.

Having set a hard cap of $6.5 billion for its latest vehicle last November, the private equity firm has already made a first close, according to sources familiar with the situation. Other LPs that have disclosed plans to participate in the fund include New Jersey State Investment Council and Virginia Retirement System. MBK closed Fund IV at $4.1 billion in 2016, having raised $2.7 billion, $1.6 billion and $1.56 billion for the three preceding vehicles.

The strategy represents a continuation of that pursued by MBK since the team spun out from The Carlyle Group in 2005: control and co-control transactions – management buyouts, corporate carve-outs, strategic partnerships, take-privates, and roll-ups – in South Korea, Japan, and Greater China. According to a New Jersey disclosure, the management fee for Fund V is 1.75% during the commitment period, and 1.5% thereafter, while the carried interest is set at 20%. The GP commitment is 2.75%.

As of June 2019, Fund I was fully realized with a net IRR of 4.5% and net total value to paid-in (TVPI) and net distributions to paid-in (DPI) of 1.31x. The subsequent three vehicles had net IRRs in the mid to high teens. Fund II had TVPI of 2.19x and DPI of 2.14x. This compares to 1.67x and 0.46x for Fund III and 1.20x and 0.09x for Fund IV.

NYSCRF had $210.5 billion in assets as of March 2019, of which $19.8 billion was in private equity. Recent commitments to Asia-based GPs – directly or through Asia Alternatives – include Affinity Equity Partners, CVC Capital Partners, DCP Capital Partners, NewQuest Capital Partners, and Boyu Capital. NYSTRS' assets stood at $122.5 billion in June 2019, with $9.3 billion in PE. It has backed the likes of ADV Partners, BGH Capital, DCP, The Carlyle Group, Pacific Equity Partners, and Primavera Capital Group in the last three years.

LACERA had $6 billion in private equity out of total assets of $61.4 billion in June 2019. It has exposure to Asia-based managers such as GGV Capital, Sinovation Ventures, and Lilly Asia Ventures.

For more insight on LPs' strategic decisions, visit AVCJ's sister publication Inframation Documents.

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• Topics
• Fundraising
• LPs
• GPs
• Buyout
• Asia
• MBK Partners
• New York State Common Retirement Fund
• New York State Teachers’ Retirement System (NYSTRS)
• Los Angeles County Employees Retirement Association (LACERA)