8 | BUYOUTS | November 19, 2018 www.buyoutsnews.com FRESH CAPITAL

been excellent, adding: “If all of our pri - Blackstone’s vate markets had done as well as they have for us, we would be thrilled.” New Mountain New Mountain told LPs that Black - stone Strategic Capital Holdings Fund stake stresses had acquired 9 percent of the partner - ship stake in New Mountain Capital San Diego LP through a strategic partnership, provid- By Dietrich Knauth ing that would benefit both New Mountain and its LPs, accord - • San Diego system balks at Blackstone investment • CIO: “It just can't end well.” ing to Sexauer. • SDCERA is below 8 pct PE target, hesitant to commit One board member questioned wheth- more while GPs have upper hand er Blackstone was becoming more like a with its minority purchase. Blackstone has acquired a 9 percent “I don’t know the details yet,” Sexau - stake in firm New Moun- er said. “It’s a private markets fund that tain Capital, and one LP says that the makes investments, and they bought into move speaks to an overheated market another private fund.” for private equity deals. Minority stakes of private equity firms San Diego County Employees’ Retire- have been traded with some regularity in ment Association has spoken recently recent months. about its hesitance to put more money Harvest Partners, a middle-market into PE while valuations are high and private investment firm, said on Oct. 19 limited partners are hungry to get more that it had sold a 15 percent minority capital out into the market. stake to Goldman Sachs Asset Manage - SDCERA, which manages a $12.9 bil- ment. Just two months earlier Golub Cap- lion trust fund, learned of the Blackstone SIphotography/iStock/Getty Images ital announced a minority investment by investment from an Oct. 15 letter to New That’s why we’re going slow, that’s why Dyal Capital, a division of Neuberger Ber- Mountain Capital’s limited partners, we’re looking for good long-term part - man, Buyouts reported. including SDCERA. ners. It’s just too asymmetric against us.” Last year, Blackstone took a less than “Institutional investors like us put SDCERA’s private equity allocation is 15 percent stake in Leonard Green and money with Blackstone, and the money 6.3 percent vs. an 8 percent target, and Partners. is now being taken from that fund to its overall private markets allocation New Mountain Capital could not go buy another private equity fund,” is 20.3 percent, below its target of 23 immediately be reached for comment. CIO Stephen Sexauer said at the pension percent. fund’s October board meeting. “It’s lower than the policy because we ACTION ITEM “We talk a lot about where valuations have not been putting money in private are, the amount of cash that’s trying to markets,” Sexauer said at the meeting. View SDCERA’s latest risk-return go to work. On average, it just can’t end Sexauer said New Mountain Capital’s report: https://bit.ly/2JbmeeO. well when you have things like this. performance for the retirement fund has

Recent LP Commitments Limited Partner Fund Name Fund Amount Fund Insight Strategy committed Target/ Size Florida State Board of Hellman & Friedman IX Buyout $250 million $16 billion Hellman & Friedman IX closed this October at $16 billion and is focused on large Administration market buyouts in buusiness in North America and Europe. Gallatin Point Capital Partners LP $100 million This is Gallantin Point’s debut fund. The firm was launched in 2016 by a former CIO of BlackRock and former Treasury official. ASF VIII Secondaries $200 million $12 billion Ardian’s latest secondaries vehicle targets $12 billion. Its predecessor closed at $14 billion. New Jersey Division of KSL Capital Partners V Buyout $100 million $3 billion KSL Capital Partners V will target opportunities in hospitality, recreation, clubs and Investment travel services. JLL Partners Fund VIII Buyout $200 million $1.25 billion JLL Partners closed its seventh fund at $1 billion. The firm invests in aerospace, healthcare, buiilding products, financial services and business services. Connecticut State Treasurer Fairview Capital Partners Venture $100 million The fund will invest in underlying and groth stage funds. Constitution Fund V Capital Pennsylvania State Employee’s TSG8 Buyout $100 million The fund strategy is unclear, but TSG Consumer Partners invests in middle-market Retirement System consumer-product companies.

Source: Buyouts