National Private Equity Program Performance Update Q3 2016

Transcription

1 National Private Equity Program Performance Update Q Presented to The Council Investment Committee of The New Mexico State Investment Council January 25, 2017

2 DISCLAIMER The following presentation relies on information provided by third parties, including the New Mexico State Investment Council ( ), s General Partners and/or Invient, s data provider. The analysis included herein is dependent on such information being complete and accurate in all material respects. Additionally, the analysis utilizes forward-looking information that is derived in part from longer-term historical data provided by third-party sources and considerable effort is made to use available information to forecast these returns and cash flow patterns. In addition, projected results, if any, are based on a number of assumptions, including returns, fund size, economic terms, targeted investment allocation and other factors. Due to various risks and uncertainties, the projections in this presentation may differ materially from actual results or change significantly if any one or more of the assumptions are changed. As such, undue reliance should not be placed on such information. Nothing herein is intended to serve as investment advice, a recommendation of any particular investment or type of investment, a suggestion of merits of purchasing or selling securities, or an invitation or inducement to engage in investment activity. This report is solely for the use of s personnel. No part of it may be circulated, quoted, or reproduced for distribution outside of without express written approval from Pavilion Alternatives Group. 2

3 Q PERFORMANCE UPDATE 3

4 PERFORMANCE DASHBOARD Quarter-over-quarter net asset value increased by $61.2 million As of September 30, 2016 ($ in millions) Source: Invient 1 Performance since inception National Private Equity Performance (by Investment Strategy) # of Net Net Total Net Multiple 1 Net IRR 1 Strategy Funds Commit. Contributed Distributed NAV Value 9/30/2016 9/30/2015 9/30/2016 9/30/2015 Active Commitments Venture Capital 14 $ $ $ $ 38.1 $ x 1.02x 0.7% 0.3% Growth Equity x 1.31x 6.7% 7.3% Buyout 66 2, , , , x 1.55x 11.7% 12.1% Special Situations x 1.33x 7.6% 8.3% Sub-total 120 $ 4,343.5 $ 2,738.4 $ 2,207.9 $ 1,625.0 $ 3, x 1.42x 8.8% 9.0% Liquidated Funds x 1.55x 18.2% 20.9% Sold Funds x 1.55x 26.6% 26.6% Grand Total 196 $ 5,021.7 $ 3,375.6 $ 3,191.9 $ 1,625.0 $ 4, x 1.45x 11.0% 11.3% Cumulative Investment Performance As of September 30, 2016 ($ in thousands) Cumulative Cash Flows / NAV $5,000 $4,000 $3,000 $2,000 $1,000 $ YTD 2016 Net Contributed NAV Net Distributed Inception-to-date Net IRR 25% 20% 15% 10% 5% 0% Net IRR Source: Invient 4

5 QUARTER-OVER-QUARTER PERFORMANCE All sub-strategies generated gains in Q and distributions outpaced contributions In Q3 2016, Buyout, Growth Equity, Special Situations and Venture Capital generated net gains of $34.6 million, $14.9 million, $12.8 million and $2.6 million, respectively 75 funds reported net gains, while 40 funds reported net losses Net distributions have outpaced net contributions by $3.7 million in Q3 2016, ending the trend of higher net contributions that occurred in the last three quarters. As of September 30, 2016 ($ in millions) Private Equity Portfolio Quarterly NAV Changes $1,700 $1,600 $99.8 $79.3 $34.5 $78.3 $82.1 $64.9 $1,500 $1,400 $1,300 $1,200 $1,508.8 $1,563.8 $1,625.0 $1,100 $1,000 3/31/16 NAV Net Contributions Net Distributions Net Gain / (Loss) 6/30/16 NAV Net Contributions Net Distributions Net Gain / (Loss) 9/30/16 NAV Source: Invient. 5

6 DIVERSIFICATION: VINTAGE YEAR The Program has exposure across multiple vintage years Current strategy targets an annual pace of $550 million to $650 million (assuming 12% target) The SIC approved seven commitments totaling $530 million in 2015, $331 million of which has been classified as a 2016 vintage year based on the fund s first cash flow Additionally, the SIC approved six commitments totaling $550 million in 2016, some of which will be classified as 2017 Diversification and Pacing by Vintage Year National Private Equity Program Active Commitments As of September 30, 2016 ($ in millions) Pacing by Vintage Year Exposure by Vintage Year $800 $700 $600 $500 $400 $300 $200 $100 $ % % % % % % % % % % % Source: Invient. Exposure defined as net asset value plus unfunded commitments. Vintage year defined by the first cash flow of the fund. * Includes commitments approved in 2015, which were reclassified to 2016 based on the fund s first cash flow. 6

7 DIVERSIFICATION: STRATEGY Portfolio is within current strategy allocation targets As of September 30, 2016 ($ in millions) Strategy Allocation Target Allocation NAV Unfunded Total Exposure Strategy Low High $ % $ % $ % Venture Capital 0% - 10% $ % $ 3.9 0% $ % Growth Equity 10% - 20% % % % Buyout 50% - 70% % 1, % 2, % Special Situations 10% - 25% % % % Total $ 1, % $ 1, % $ 3, % Source: Data from Invient and target allocations from January 24, 2012 strategy presentation to. Target allocation refers to portfolio s total exposure (NAV + Unfunded). Diversification by Strategy National Private Equity Program Active Commitments As of September 30, 2016 By Commitment By Exposure Special Situations 18% Special Situations 19% Venture Capital 9% Growth Equity 11% Buyout 62% Venture Capital 1% Growth Equity 16% Buyout 64% Source: Invient. Exposure defined as net asset value plus unfunded commitments. 7

8 DIVERSIFICATION: GEOGRAPHY AND INDUSTRY Portfolio is concentrated in North America and diversified across industries Geographic diversification is based on the headquarters of the underlying portfolio companies The portfolio s exposure to Europe (target of 15% to 25%) increased within target driven by new investments and fund gains The underlying companies are diversified across a number of industries, with consumer companies having the largest allocation and information technology companies having the second largest allocation Underlying Portfolio Company Diversification (By Remaining Value) As of September 30, 2016 Geography Industry Asia + Emerging Markets 7% Unclassified 10% Other 11% Europe 18% North America 65% Information Technology 18% Industrials / Materials 14% Healthcare 11% Consumer 28% Financials 13% Energy 5% Source: Invient. Does not include liquidated or sold funds. Geography and industry based on the headquarters and primary industry of the underlying portfolio companies.. 8

9 PUBLIC MARKET EQUIVALENT PERFORMANCE 10-YEAR Private equity performance has outperformed public equity over the last 10 years Last 10 years through September 30, % National Private Equity Performance Relative to Benchmarks 10.0% 8.0% 8.4% 7.9% 8.0% 7.8% 6.0% 4.0% 2.0% 0.0% Private Equity Russell 3000 Russell 2000 S&P 500 Source: Invient. 9

10 APPENDIX 10

11 PERFORMANCE DASHBOARD (TOTAL) As of September 30, 2016 ($ in millions) Source: Invient 1 Performance since inception National Private Equity Performance Since Inception # of Net Net Total Net Multiple 1 Net IRR 1 Strategy Funds Commit. Contributed Distributed NAV Value 9/30/2016 9/30/2015 9/30/2016 9/30/2015 Venture Capital 57 $ $ $ $ 38.1 $ x 1.26x 10.8% 11.2% Growth Equity x 1.34x 9.8% 9.9% Buyout 91 3, , , , x 1.54x 12.1% 12.2% Special Situations x 1.34x 7.8% 8.4% Grand Total 196 $ 5,021.7 $ 3,375.6 $ 3,191.9 $ 1,625.0 $ 4, x 1.45x 11.0% 11.3% 11

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