Institutional Investors Mandates
Institutional Investors Mandates
Stanford & London Pension Fund Looking to Private Equity
This week, two large institutional investors showed an interest in investing in private equity. First, the London Pension Fund Authority’s CEO announced that the fund is seeking investment opportunities in private equity and infrastructure. As of June 2009, the London pension fund’s assets are divided between 2.1 billion pound ($3.3 billion) in an active fund primarily invested in global equity and 1.1 billion pound ($1.74 billion) in a “sub-fund” which invests more conservatives and is used to pay out pensions. Now, private equity firms will compete for a share of the fund’s total assets, in excess of $5 billion. At the end of June, the pension fund had 9% of its assets invested in private equity.
Chief Michael Taylor wants the active fund to use some of its cash, worth 7 percent of its assets.
“We are looking for investment in private equity and infrastructure, but the problem is that there has been precious little distribution at the moment; not a lot of IPOs and little trade in that area,” he said.
As part of the same cash redeployment, the LPFA has invested 20 million pounds in the Prudential (PRU.L) M&G UK Comapanies Financing fund, which will make loans to sound UK companies stymied by a lack of bank lending.The scheme may invest a further 30 million pounds if M&G hits the 2 billion pounds target.
The fund has so far gathered 1.3 billion pounds and its total assets may rise to 1.6 billion pounds after its third closing. The fund has not yet made any loans, said M&G’s fixed income chief investment officer Simon Pilcher. Source
Stanford also showed interest in investing more in private equity. The university’s endowment fund is looking to private equity firms to take some $1 billion of its $14.5 billion in assets.
Although the story became public in the past few days, university finance officials have been conversing with major private equity firms on the matter for several weeks, I’m told. They wouldn’t say who, or if there are any takers yet. “We’re testing the market,” said one official, who hastened to add, “We’re not in a liquidity crisis. We’re just looking to balance our portfolio.”Said portfolio hasn’t been very good to Stanford of late. As of the year ending June 30, it was down 25.9 percent from the previous year, according to the Stanford Management Co., which manages the portfolio. Source
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