Large LPs willing to explore riskier growth options – AVCJ Forum

Alicia Gregory, head of private equity at Australia’s Future Fund, acknowledged that it can be difficult to make large deployments at early stages in this space but framed the opportunity as a matter of patience and long-term thinking.

“In the last 10 years, companies are staying private longer, they’re raising quite large amounts in the private markets, and actually having a seat at the table early and following those investments on does allow you to deploy relatively large amounts of money today,” Gregory said. “So, I think some of the barriers have come down about being able to get access to companies.”

Other LPs have seeded managers to fill gaps in their growth agendas. Jim Pittman, global head of private equity at British Columbia Investment Management Corporation (BCI) and previously a managing director at PSP Investments, estimates he has helped set up 15 GPs. They include Asia Alternatives and MBK Partners. BCI is currently underweight on technology but there are plans to build it out.

“We’ve done a lot of our technology and venture through our fund-of-funds program. They’ve actually shown us deals that have come out of their co-investment segments, and some of those will come back to us in the near future,” Pittman said. “Those are the areas we’re going to focus on most these days – technology, innovation, and disruption types of exposures.”

California State Teachers' Retirement System (CalSTRS) has about $1.2 billion in its emerging managers program, which represents about 10% of its overall allocation to external managers. Further exposure to this returns profile could focus more on areas such as innovation and private credit, however, due to a relatively high fee burden.

“Taking an emerging manager approach puts a little bit heavier fee load, and from that perspective, that’s been a bit more challenging compared to some of the lower-cost areas,” Scott Chan, deputy CIO at CalSTRS, said. “I’d say the best performing for us is co-investment, then partnerships, and then probably the emerging managers program. Part of that falls directly in line with the fee load.”

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• Topics
• LPs
• Fundraising
• Growth
• Venture
• Technology
• Future Fund
• California State Teachers’ Retirement System (CalSTRS)
• British Columbia Investment Management (BCI)
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