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Is Uncle Sam The Biggest Enabler Of Private Equity Jobs "Offshoring"?

Tyler Durden's picture




 

Lately, it has become particularly fashionable to bash private equity, especially among those workers in the employ of the state. The argument, in as much as capitalism can be summarized in one sentence, is that PE firms issue excess leverage, making bankruptcy inevitable (apparently those who buy the debt are unaware they will never get their money back), all the while cutting headcount to maximize cash flow (apparently the same PE firms don't realize that their investment will have the greatest terminal value to buyer if it has the highest possible growth potential, which means revenue and cashflow, which means proper CapEx investment, which means streamlined income statement, which means more efficient workers generating more profits, not less). The narrative ultimately culminates with some variation on a the theme that PE firms are responsible for offshoring jobs. While any of the above may be debated, and usually is especially by those who have absolutely no understanding of finance, one thing is certain: when it comes to bashing PE, America's public workers should be the last to have anything negative to say about Private Equity, and the capital markets in general. Why? Because when it comes to fulfilling those promises of a comfortable retirement with pensions and benefits paying out in perpetuity, always indexed for inflation, and otherwise fulfilling impossible dreams, who do America's public pension fund administrators go to? The very same private equity firms that have suddenly become outcast number 1.

Here is the New York State Common Retirement Fund, which "holds assets in trust for more than one million employees and retirees from State governments, most local governments and some public authorities." The fund manages $150.6 billion as of March 31, 2012; it is the third largest pension plan in the US, with its California cousin: Calpers, the biggest. Some facts about the pension fund:

Member Information:

  • Overall membership in NYSLRS: 1,059,398
    • 656,224 members (active or vested)
    • 403,174 retirees and beneficiaries
    • 95% are members of ERS; 5% are members of PFRS

Average Pensions:

  • Average pension for all ERS retirees in FY 2012: $20,241
  • Average pension for all PFRS retirees in FY 2012: $42,259

Employer Contribution Rates:

  • FY 2014 average contribution rates: 20.9 percent of payroll for ERS; 28.9 percent of payroll for PFRS.
  • Employers contributed roughly $4.59 billion to the Retirement System in FY 2012.
  • Employees contributed $273.2 million in FY 2012.
  • Employer and employee contributions have helped the Fund remain well funded.

In other words, it is the fund's obligation to allocate cash to places where it will generate the highest returns. So where does the NY Retirement fund go to make sure the money of its public workers is best managed? This is where: thousands and thousands of private equity firms (from the source, in reverse chronological order):

2007

Kline Hawkes Growth Equity Fund through the Aldus/NY Emerging Fund, $15 million commitment. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on February 7.

Globespan Capital Partners V through the GKM Newport/NY Venture Capital Fund, $15 million commitment. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on February 22.

Green Equity Investors V, $125 million commitment. CRF has been an investor with Green since 2002. No placement agents were involved inCRF’s investment. The commitment closed on March 1.

Draper Fisher Jurvetson IX through the GKM Newport/NY Venture Capital Fund, $25 million. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on March 2.

Founders Equity, $18 million additional commitment. This brings the total committed to Founders to $38 million. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on March 6.

Lion Capital II, €125 million commitment. This is an existing relationship for CRF. Citigroup received a fee from Lion for placement agent services. The commitment closed on March 7.

Clearwater Capital Partners III, $50 million commitment. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on March 13.

TPG Star through the Hudson River Fund II, $25 million commitment. CRF has invested with TPG since 1997. No placement agents were involved in CRF’s investment. The commitment closed on March 14.

Apex Investment Fund VI through the GKM Newport/NY Venture Capital Fund, $12.5 million commitment. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on March 15.

Technology Partners VIII through the GKM Newport/NY Venture Capital Fund, $20 million. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on March 15.

A venture capital fund through the Fairview Ventures II-NY Fund, $7.5 million. For competitive reasons the identity of the fund is not disclosed. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on March 15.

Saw Mill Capital Partners II through the Hudson River Fund II, $20 million commitment. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on March 19.

SAIF Partners III, $50 million commitment. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on March 20.

Psilos Group Partners III through the GKM Newport/NY Venture Capital Fund, $20 million. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on March 28.

Tudor Ventures III through the GKM Newport/NY Venture Capital Fund, $10 million commitment. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on March 30.

Summer Street Capital II through the Hudson River Fund II, $5 million commitment. CRF has been an investor in Summer Street since 2000. No placement agents were involved in CRF’s investment. The commitment closed on March 30.

KKR Asia Fund, $50 million commitment. KKR is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on June 20.

Accent 2008 through the Access/NY European Middle Market Buyout Fund, €10 million commitment. No placement agents were involved in CRF’s investment. The commitment closed on June 26.

Kohlberg Investors VI through the Hudson River Fund II, $25 million commitment. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on June 29.

Carlyle Partners V, $150 million. This is an existing relationship for CRF. Carlyle reported that no placement agents were involved in CRF’s investment in Carlyle Partners V. The commitment closed on September 7.

A private equity fund through the Hudson River Fund II, $75 million commitment. This is an existing relationship for CRF. For competitive reasons, the identity of the fund is not disclosed. No placement agents were involved in CRF’s investment. The commitment closed on September 10.

OCM Opportunities Fund VIIb, $200 million commitment. CRF has been an investor with OCM since 1999. No placement agents were involved in CRF’s investment. The commitment closed on September 19.

Roark Capital Partners II through Hudson River Fund II, $15 million commitment. CRF has been an investor in Roark since 2005. Lazard received a fee from Roark for placement agent services.  The commitment closed on September 28.

TXU through Strategic Co-Investment Partners, $25 million commitment. No placement agents were involved in CRF’s investment. The commitment closed on September 28.

Platinum Equity Capital Partners II through the Hudson River Fund II, $20 million commitment. This is a new fund relationship for CRF. Citigroup Global Markets received a fee from Platinum for placement agent services. The commitment closed on October 12.

RLJ Partners through the Aldus / NY Emerging Fund, $20 million commitment. This is a new fund relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on October 15.

Warburg Pincus Private Equity Partners X, $350 million commitment. CRF has been an investor with Warburg since 1989. No placement agents were involved in CRF’s investment. The commitment closed on October 19.

European buyout fund through the Access/NY European Middle Market Buyout Fund, €6 million commitment. CRF will release the name of the fund once the fund has formally closed with all investors. This is a new fund relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on October 23.

High Road Capital Partners Fund I through the Hudson River Fund II, $15 million commitment. This is a new fund relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on October 30.

Paladin III (NY), $25 million commitment. CRF has invested with Paladin since 2004. No placement agents were involved in CRF’s investment. The commitment closed on November 15.

Blum Strategic Partners IV, $75 million commitment. CRF has invested with Blum since 2001. No placement agents were involved in CRF’s investment. The commitment closed on November 19.

GESD II through the Hudson River Fund II, $15 million commitment. This is a new fund relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on December 5.

Nogales Investors Fund II, $10 million additional commitment. This is an existing relationship for CRF. Nogales reported that Liati Capital was involved in the transaction as a placement agent but Liati agreed not to be compensated. The additional commitment closed on December 11.

Giza Venture Fund V through the Hudson River Fund II, $15 million commitment. CRF has invested with Giza since 2005. No placement agents were involved in CRF’s investment. The commitment closed on December 20.

 

2008

FIMI Opportunity IV through the Hudson River Fund II, $20 million commitment. This is a new fund relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on January 2.

N+1 Private Equity Fund II through the Access/NY European Middle Market Buyout Fund, €10 million commitment. This is a new fund relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on January 9.

Bridgepoint Europe IV, €100 million commitment. CRF has been an investor with Bridgepoint since 1998. No placement agents were involved in CRF’s investment. The commitment closed on January 18.

Craton Equity Partners through the Aldus / NY Emerging Fund, $10 million commitment. This is a new fund relationship for CRF. Arvco Capital received a fee from Craton for placement agent services. The commitment closed on January 28.

Performance Venture Capital Fund II, $75 million commitment. Performance is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on March 26.

Quaker BioVentures through the Aldus/NY Emerging Fund, $10 million commitment. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on April 25.

Paladin III through the Hudson River Fund II, $15 million commitment. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on April 30.

CVC European Equity Fund V, €150 million commitment. CVC is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed May 7.

Levine Leichtman Capital Partners IV, $50 million commitment. Levine Leichtman is a woman-owned firm, and is an existing relationship for CRF. Wetherly Capital Group received a fee from Levine Leichtman for placement agent services. The commitment closed May 22.

TPG Partners VI, $300 million commitment. TPG is an existing relationship for CRF. No placement agents were involved in CRF’s investment, which closed June 9.

SW Pelham Fund III through the Aldus/NY Emerging Fund, $10 million commitment. SW Pelham is a minority and woman-owned firm and is a new relationship for CRF. Potomac Capital Markets received a fee from SW Pelham for placement agent services. The commitment closed June 2.

Lindsay Goldberg III, $250 million commitment. Lindsay Goldberg is an existing relationship for CRF. No placement agents were involved in CRF’s investment, which closed July 30.

VantagePoint CleanTech Partners II through the GKM Newport/NY Venture Capital Fund, $50 million commitment. The commitment is part of the Green Strategic Investment Program. This is an existing relationship for CRF. The commitment closed July 31.

Ares Corporate Opportunities Fund III, $100 million commitment. Ares is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed September 16.

Asia Alternatives Capital Partners II, $50 million commitment. Asia Alternatives is a minority and women-owned firm. Asia Alternatives is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed September 24.

GenNx360 Capital Partners, $60 million commitment. GenNx360 is a minority-owned firm. GenNx360 is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed September 30.

Jerusalem Venture Partners Media V through the Hudson River II, $10 million commitment. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. This commitment closed October 15.

Aisling Capital Partners III, $45 million commitment. Aisling is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed October 17.

 

2009

NYSCRF Pioneer Partnership Fund A, $200 million commitment. Pioneer Partnership A is one of three captive fund-of-funds within the emerging manager program and is managed by Bank of America Capital Access Funds. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on January 21.

NYSCRF Pioneer Partnership Fund I, $100 million commitment. Pioneer Partnership I is one of three captive fund-of-funds within the emerging manager program and is managed by Parish Capital Advisors. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on January 21.

NYSCRF Pioneer Opportunities Fund I, $250 million commitment. Pioneer Opportunities I is one of three captive fund-of-funds within the emerging manager program and is managed by Parish Capital Advisors. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on January 21.

Softbank Capital Technology New York, $20 million additional commitment. This is in addition to an existing $30 million commitment. Softbank NY is part of the Instate Program. Softbank is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on January 29.

DFJ Gotham Fund II, $25 million commitment. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed March 12.

PCGI/NYSCRF Emerging Europe Investment Program, $100 million commitment. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed March 13.

Falcon Strategic Partners III, $50 million commitment. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on June 30.

Carpenter Community BancFund through the NYSCRF Pioneer Partnership Fund B, $30 million commitment. Carpenter is part of CRF’s Emerging Manager program. This is a new fund relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on June 30.

TA XI, $100 million commitment. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed July 29.

Hellman & Friedman Capital Partners VII, $200 million commitment. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on September 8.

Hudson Clean Energy Partners, $100 million commitment. This is a new relationship for CRF. No placement agents were involved in CRF’s  investment. This commitment is part of the Comptroller’s Green Strategic Investment Program. The commitment closed on October 30.

Clearlake Capital Partners II, $15 million commitment through the NYSCRF Pioneer Partnership Fund - A. Clearlake II is part of CRF’s Emerging Manager program. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on November 2, 2009.

DeltaPoint Capital IV (New York), $25 million commitment. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on November 6, 2009.

Bunker Hill Capital II, $25 million through the Pioneer Partnership Fund B. Bunker Hill is part of CRF’s Emerging Manager program. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on December 7, 2009.

Relativity Fund, $30 million through the Pioneer Partnership Fund B. Relativity is part of CRF’s Emerging Manager program. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on December 11, 2009.

Bunker Hill Capital II, $25 million through the Pioneer Partnership Fund B. Bunker Hill is part of CRF’s Emerging Manager program. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on December 7, 2009.

Relativity Fund, $30 million through the Pioneer Partnership Fund B. Relativity is part of CRF’s Emerging Manager program. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on December 11, 2009.

 

2010

DBL – The California Equity Fund, $7.5 million through the NYSCRF Pioneer Partnership Fund A. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on May 30.

Gilde Buyout Fund IV, €20 million commitment. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on June 29.

Blackstone/GSO Capital Solutions Fund, $50 million commitment. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed on July 9.

High Peaks Seed Ventures NY, $15 million. This is an existing relationship for CRF and part of CRF’s In-State Appleseed Venture Capital Program. No placement agents were involved in CRF’s investment. The commitment closed August 2.

Institutional Venture Partners XIII, $45 million. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed August 17.

Blackstone Capital Partners VI, $300 million. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed August 17.

Oaktree Capital Management, $200 million. CRF invested $100 million in OCM Opportunities Fund VIII and $100 million in OCM Opportunities Fund VIIIb. This is an existing relationship with CRF. No placement agents were involved in the investment. The commitments closed September 30.

Grey Mountain Capital Partners, $12.5 million through the NYSCRF Pioneer Partnership Fund A. This is a new relationship for CRF. No placement agents were involved in the investment. The commitment closed October 18.

JMI Equity Fund VII, $40 million. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed November 19.

Capital Alliance Private Equity III Limited, $15 million through the NYSCRF Pioneer Partnership Fund B. This is a new relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed November 27.

Vista Foundation Fund I, $50 million commitment. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed December 17.

KKR China Growth Fund, $125 million commitment. This is an existing relationship for CRF. No placement agents were involved in CRF’s investment. The commitment closed December 30.

 

2011

Centerbridge Capital Partners II, $150 million. This is a new relationship for CRF. No placement agents were involved in CRF's investment. The commitment closed on January 18.

M² NY Pioneer Fund, $100 million. This is a new relationship for CRF. The commitment is part of the Comptroller's Emerging Manager program. No placement agents were involved in CRF's investment. The commitment closed on March 1.

FS Equity Partners VI, L.P., $80 million. This is an existing relationship with CRF. No placement agents were involved in the investment. The commitment closed April 21, 2011.

Dominus Capital Partners, $20 million through the NYSCRF Pioneer Partnership Fund A. This is a new relationship for CRF. No placement agents were involved in CRF's investment. The commitment closed on April 28.

Tenex Capital Partners, $25 million through the NYSCRF Pioneer Partnership Fund A. This is a new relationship for CRF. No placement agents were involved in CRF's investment. The commitment closed on April 29.

Access/NY European Middle Market Buyout Fund II - €200 million (two €100 million tranches) was committed. Access is an existing relationship for CRF. Access is a fund of funds focused on buyout opportunities in Europe. No placement agents were involved in CRF’s investment. The investment closed on May 4, 2011.

KSL Capital Partners III $115 million was committed. KSL is a buyout fund within the Private Equity Portfolio. This investment represents a new relationship for CRF. No placement agents were involved in the CRF’s investment. The investment closed on May 31, 2011.

Initiative & Finance FCPR I, €10 million, through the Access/NY European Middle Market Buyout Fund II. This is a new relationship for CRF. No placement agents were involved in CRF's investment. The commitment closed on May 12.

Asia Alternatives Capital Partners III, $50 million. This is an existing relationship for CRF. No placement agents were involved in CRF's investment. The commitment closed on May 20.

Snow Phipps II - $100 million commitment. Snow Phipps is a new relationship for CRF. No placement agents were involved in CRF’s investment. The investment closed on June 30, 2011.

New York Balanced Pool Asia Investors, $75 million. This is an existing relationship for CRF. No placement agents were involved in CRF's investment. The commitment closed on June 23.

New York Co-Investment Pool Asia Investors, $125 million. This is an existing relationship for CRF. No placement agents were involved in CRF's investment. The commitment closed July 1.

Litorina IV, €9.4 million through the Access/NY European Middle Market Buyout Fund II. This is an existing relationship for CRF. No placement agents were involved in CRF's investment. The commitment closed July 7.

Endless LLP Fund III, €8.8 million through the Access/NY European Middle Market Buyout Fund II. This is an existing relationship for CRF. No placement agents were involved in CRF's investment. The commitment closed July 20.

New York Business Development Corporation, $100 million. NYBDC is an existing relationship for CRF. No placement agents were involved in this transaction, which closed on August 1.

Patria-Brazilian Private Equity Fund IV, $75 million commitment. Patria is a new relationship for CRF. No placement agents were involved the transaction, which closed on August 12.

Vista Equity Partners Fund IV, $300 million commitment. Vista Equity is an existing relationship for the CRF. No placement agents were involved in the transaction, which closed on August 31.

TPG Growth II, L. P., $200 million commitment. TPG is an existing relationship for the CRF. No placement agents were involved in the CRF’s investment. This investment closed on September 2, 2011.

Auger II, €10 million commitment. Auger is a new relationship acquired through the Access/NY European Middle Market Buyout Fund II Fund of Funds. This transaction closed on October 4, 2011.

Avenue Europe Special Situations Fund II (Euro), L. P. - €100 million commitment. Avenue is an existing relationship for the CRF. No placement agents were involved in the CRF’s investment. This investment closed on November 4, 2011.

Coutour Venture Partners II, L. P. - $10 million commitment. Contour is a new relationship for the CRF. No placement agents were involved in the CRF’s investment. This investment closed on November 10, 2011.

Hony Capital V, L.P., $100 million. Hony is a new relationship for CRF. No placement agents were involved in the investment, which closed on December 15, 2011.

Hony Capital V, L.P., $15 million discretionary commitment made through the New York Co-Investment Pool Asia Investors, L.P. No placement agents were involved in the investment, which closed on December 15, 2011.

Hony Capital V, L.P., $4 million non-discretionary commitment made through the New York Balanced Pool Asia Investors, L.P. No placement agents were involved in the investment, which closed on December 15, 2011.

Access 2012, L.P., €10 million. Access is a new relationship for CRF acquired through the Access / New York European Middle Market Buyout Fund II, L.P. No placement agents were involved in the investment, which closed on December 21, 2011.

Searchlight Capital, L.P., $150 million. Searchlight is a new relationship for CRF. No placement agents were involved in the investment, which closed on December 29, 2011.

Acon Equity Partners III, L.P., up to $120 million. Acon is an existing relationship for CRF. No placement agents were involved in the investment, which closed on December 30, 2011.

 

2012

Brightwood Capital SBIC I, LP, $15 million. The Brightwood commitment was made through the M² Y Pioneer Fund, L. P. This is a new relationship for CRF. No placement agent fees were involved in the CRF’s investment, which closed on February 3, 2012.

Actera Partners II, LP, $15 million. Actera is a new relationship through the 57 Stars Emerging Europe Fund (NYSCRF), LP. No placement agent fees were involved in the CRF’s investment. This investment closed on February 7, 2012.

Monroe Capital Partners, LP, $10 million commitment. Monroe is a new relationship for the CRF through the NYSCRF Pioneer Partnership Fund A. No placement agent fees were involved in the CRF’s investment. This investment closed on February 24, 2012.

Green Equity Partners VI, LP, $200 million commitment. Green is an existing relationship for the CRF. No placement agent fees were involved in the CRF’s investment. This investment closed on February 28, 2012.

Farallon Asia Special Situations Fund II, LP, $10 million commitment. Farallon Asia is a new relationship for the CRF through the NY Co-Investment Pool Asia Investors, LP. No placement agent fees were involved in the CRF’s investment. This investment closed on February 29, 2012.

Centerbridge Special Credit Partners II, L.P., $72.8 million commitment. Centerbridge is an existing relationship for the CRF. No placement agents were involved in the CRF’s investment, which closed March 1.

GenNx360 Capital Partners II, L. P., up to $125 million maximum commitment. GenNx360 is an existing relationship for the CRF. No placement agents were involved in the CRF’s investment, which closed March 2.

Siris Partners II, L. P., $20 million commitment. Siris is a new relationship through the M² NY Pioneer Fund. No placement agent fees were involved in the CRF’s investment. This investment closed on April 16, 2012.

Fortissimo Capital Fund III, L.P., $10 million commitment. This is a new relationship for CRF through the 57 Stars Emerging Europe Fund. No placement agents were involved in the investment, which closed on May 17, 2012.

Clearwater Capital Partners IV, L.P., $75 million commitment. This is an existing relationship for CRF. No placement agents were involved in the investment, which closed on May 15, 2012.

Quadriga Capital Private Equity Fund IV, L.P., €10 million commitment. Quadriga is an existing relationship through the Access/NY Middle Market Buyout Fund. No placement agents were involved in the investment, which closed on May 7, 2012.

Ares Corporate Opportunities Fund IV, L.P., $150 million commitment. Ares is an existing relationship for the CRF. No placement agent fees were involved in the CRF’s investment, which closed on June 29, 2012.

The Fifth Cinven Fund (Cinven V), L.P., €150 million commitment. Cinven is an existing relationship for the CRF. No placement agent fees were involved in the CRF’s investment, which closed on June 12, 2012.

Palatine Private Equity Fund II, L.P., £8.7 million commitment. Palatine is a new relationship for the CRF through the Access/NY Middle Market Buyout Fund II. No placement agents were involved in the CRF’s investment, which closed on July 6, 2012.

 

* * *

The list above includes only the private equity firms that the NY pension fund has invested cash in. It excludes the capital allocations to hedge funds (we will release that list once the hedge fund bashing begins) and other alternative asset managers: that list is also just as massive. Furthermore, the list is also only for one pension fund: we leave it to the more inquisitive readers to conduct the same analysis for other US pension funds. Going further back will certainly reveal many more names, among them, with virtual certainy, a rather infamous company known as Bain Capital.

For those who are still confused what the above list means, here is the summary: bash Private Equity all you want, but ask this: who is the biggest enabler of private equity's infamous "offshoring" - answer: Uncle Sam, whose desperate need to allocate cash for most efficient management of welfare resources, just happens to be one of the biggest (if not the biggest) source of "Equity" in Private Equity. Because without private equity, America's millions of civil servants would have little hopes of generating the kinds of pension, retirement and healthcare returns for the rest of their lives they have grown accustomed to expect.

And the last thing America, with its 350% in consolidated public and private debt/GDP can withstand, is its population suddenly realizing its entitlement hopes and dreams (excluding the $100 trillion in underfunded liabilities of course) rest in the hands of the same bankers that everyone loves so much to hate.

 

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Wed, 09/26/2012 - 12:54 | 2832597 Flakmeister
Flakmeister's picture

Loot and Pillage! Bitchez!

Wed, 09/26/2012 - 12:57 | 2832604 GetZeeGold
GetZeeGold's picture

 

 

My gas comes from Brazil.....and my fries come from France.

 

That's the way we roll in East LA.

Wed, 09/26/2012 - 13:01 | 2832627 Skateboarder
Skateboarder's picture

*scans through article*

FUCK PE...

*leaves*

Wed, 09/26/2012 - 13:07 | 2832659 Surly Bear
Surly Bear's picture

I saw yesterday junk is paying a premium of 542 basis points...fucking junk.

Wed, 09/26/2012 - 13:26 | 2832722 CPL
CPL's picture

It's because junk becomes more expensive with inflationary pressures.

Stuff is still priced to market because it's only stuff.

Things are matching junk in price action today on the markets.

Now let's talk to the guy that has something to say.

- My interpretation of CNBC this morning

Wed, 09/26/2012 - 14:16 | 2832904 Kitler
Kitler's picture

And let's not forget the shitty assets these managers often buy with a little "fiscal inducement"...

Mr. Cuomo also said that pension kickbacks are a national problem:

New York state’s criminal probe of kickbacks paid by companies eager to manage its $122 billion state pension fund has exposed “a national network of actors” whose schemes are ongoing, state Attorney General Andrew Cuomo said on Thursday.

“This is all across the nation, and it’s continuing today,” the Democratic attorney general said on a conference call.

Read more at http://www.nakedcapitalism.com/2009/05/guest-post-systemic-fraud-at-public.html#jG4DbEejouTCToUg.99

Wed, 09/26/2012 - 14:38 | 2832983 RockyRacoon
RockyRacoon's picture

There wasn't much to read actually.  I'm a bit confused about cause/effect or cart/horse problems.  Where the money goes is important, but can it all be attributed to one cause, or a primary cause?  What came first, the investment opportunity or the vehicle?  I'll admit to not being the sharpest knife in the drawer, but my knee-jerk response is that the article assumes too much.  There's more to the story than the veneer of "this" caused "that".

Wed, 09/26/2012 - 13:03 | 2832633 Precious
Precious's picture

Private equity is a tax shelter, not a job, which explains why it's offshore.

Wed, 09/26/2012 - 13:09 | 2832667 redpill
redpill's picture

If we eliminated corporate tax, payroll tax, and the income tax and replaced them with a single point-of-sale tax on retail goods and services, you would spontaneously eliminate much of the motivation for offshoring today.

Wed, 09/26/2012 - 21:32 | 2834270 Slightly Insane
Slightly Insane's picture

Ok, private equity is evil, (profit is evil?)

 

How much private equity existed in the U.S.S.R.?   How well did that experiment work out?

 

Can we define where wealth comes from?   (Ok, I know I'm an idiot, but in the absence of private property, what happens to property, incentive to work, desire to innovate, ecetera?   Is everyone blind to "statism' and the wealth destruction that comes with it?)

Wed, 09/26/2012 - 13:30 | 2832734 Cash2Riches
Cash2Riches's picture

Doesn't surprise me at all. Governments are hollowing out their economies worldwide.

http://silverliberationarmy.blogspot.ca/

Wed, 09/26/2012 - 13:35 | 2832745 FL_Conservative
FL_Conservative's picture

I thought everyone just bought AAPL?

Wed, 09/26/2012 - 13:53 | 2832815 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

Sigh, that's probably where they put the rest of their money (along with Faceplant). No gold, I bet. Of course, if they did buy AAPL, they're looking at how "rich" they are now, but wait for that Black Swan to land in their front yard one day soon...just like CalPers was rich as it bought CA real estate.

I happened to crunch a few numbers from the above:

  • 403,174 retirees and beneficiaries
  • 95% are members of ERS; 5% are members of PFRS
  • Average pension for all ERS retirees in FY 2012: $20,241

    Average pension for all PFRS retirees in FY 2012: $42,259

    (403,175 * 0.95) * $20,241 + (403,175 * 0.05) * $20,241 = approx $8.6 bil/yr

    So, need to outgo 8.6 billion per year just for the existing retirees. I don't see enough in the contributions, nor enough miracle returns from any of their investments to actually sustain this in the long run.

    Wed, 09/26/2012 - 15:37 | 2833177 DosZap
    DosZap's picture

    Mr. Tyler sir,

    Uh, yes they are.

    It's a plan that goes all the way back to the Leauge of Nations, that failed, and then was brought back onto line, when the UN was formed.

    The idea behind it was if every nation was trading/buying/selling with each other, soon they would be so dependent on each other, it would END ALL WARS.Boy were they wrong on that one.

    Thank Mr.J D Rockefeller for that brilliant move.

    And there it is in a nutshell.( and add the NWO aspect they knew it would bring, and viola'!!!!!!!!!!!!!!!! dere ya hab it).

    Wed, 09/26/2012 - 21:49 | 2834307 Slightly Insane
    Slightly Insane's picture

    Yup, that is the goal.  What they can't do with regulations, they'll get with taxes.  The end is to drive the private sector into the shitter.  Well, then, the a-wads working for the communist in chief will have completed their mission, all the while driving their pension into the proverbial "toilet".

     

    Ain't that grand!

    Wed, 09/26/2012 - 12:55 | 2832601 slaughterer
    slaughterer's picture

    Good article.  Should be read as an appendix to the Matt Taibibi article on Romney/Bain in last month's RS.  Thanks for writing it, thanks for posting it.  It is all true.  

    Wed, 09/26/2012 - 12:58 | 2832614 Debtonation
    Debtonation's picture

    <---I support Mitt or Barack

    <---I support someone else or no one at all

    Wed, 09/26/2012 - 12:59 | 2832617 bagehot99
    bagehot99's picture

    So it's all just phony posturing, and fake? The creation of a phantom designated villain, such as Eastasia? You'd think this came out of a well-trodden leftist playbook!

    Wed, 09/26/2012 - 13:03 | 2832634 buzzsaw99
    buzzsaw99's picture

    pension fund managers are like CONgreffcritters, stupid and corrupt. give it all to stevie cohen, he needs his three and fiddy bitchez

    http://www.youtube.com/watch?v=9cn7xfBpZ3M

     

     

    Wed, 09/26/2012 - 13:05 | 2832641 LawsofPhysics
    LawsofPhysics's picture

    Isn't fascism/cronyism great?  < sarc off > bloody sheep.

    Wed, 09/26/2012 - 13:05 | 2832645 Greater Fool
    Greater Fool's picture

    Yep, it's true. Alternatives allocations in US pension funds are rising, and PE is one of the main beneficiaries.

    Many of these funds have no idea what their investments are worth aside from the funds' own valuations (often lagged up to 3 months). They produce cash flow, sure, but they are also far more illiquid and far less transparent than all those "toxic" securitizations everyone had those little problems with a couple years ago.

    So here's a riddle: With pensions going cash-flow negative over the next 10 years, where do they do their net liquidations? If funding ratios continue to look bad, they'll dump the more liquid (lower return) products and potentially could wind up very short of liquidity. Add one little financial panic and it could be lots of fun--suspended redemptions, pensions with assets on their books that are "worth a lot" even though they can't make liability payments...good times.

    Wed, 09/26/2012 - 13:07 | 2832656 LawsofPhysics
    LawsofPhysics's picture

    So "mark to fantasy" accounting won't last forever?!?!?  Going on 30+ years as far as I can tell.

    Wed, 09/26/2012 - 13:11 | 2832674 Greater Fool
    Greater Fool's picture

    Accounting is one thing, cash flow and liquidity is another. My point is that if you're 40% allocated to an asset class that you cannot value and cannot sell, you're leaving yourself open to the same kinds of wrong-way risk that torched owners of asset-backed securities not long ago.

    Wed, 09/26/2012 - 13:19 | 2832692 LawsofPhysics
    LawsofPhysics's picture

    Perhaps "accounting" was the wrong word. So you are concerned that the "market" is no longer facilitating true "price discovery" or risk transparency/pricing? LMFAO! No shit, been going on for 30+ years.  Guess what has no counterparty risk?  Someday the fraud might get prosecuted and real consequences for bad behavior might return, but don't hold your breath.

    Wed, 09/26/2012 - 13:39 | 2832754 Greater Fool
    Greater Fool's picture

    I'm not making a principally political statement: I'm making a practical one. In a market crash scenario, if pensions need to raise cash to make good on liabilities, these assets, no matter what their actual value, may well be impossible to liquidate. Hedge Funds are marketing separate account structures to the biggest pensions to mitigate this worry--so they're still exposed to the liquidity risks of the assets, but at least not to the manager on top of that.

    As far as I know, there are really no such protections in PE. If funds need to suspend redemptions (as is quite likely in a crisis scenario, since the underlying assets are themselves far less liquid than most others, and when credit is tight are almost impossible to sell at any price), then they will, leaving pension funds with somewhere between a fifth and a half of their capital basically inaccessible. Not a pretty scenario, in my opinion.

    Wed, 09/26/2012 - 13:56 | 2832828 LawsofPhysics
    LawsofPhysics's picture

    So, in other words.  Pension funds and you and I would be better served  by planting fruit trees because the chance to "raise cash" in the future would be considerable more reliable when the fruit comes in and we sell it at the local farmer's market.  Awesome.

     

    Humanity is the ponzi and sorry, but there are no "pretty" scenarios moving.

    Wed, 09/26/2012 - 15:33 | 2833151 Apocalicious
    Apocalicious's picture

    So you want to plant fruit trees? I've got a great permanent crop manager that's raising a new fund right now. That doesn't suit? Have you every thought about timberland as an institutional asset class?

    Wed, 09/26/2012 - 17:39 | 2833734 LawsofPhysics
    LawsofPhysics's picture

    Already have a few hundred arcres of both.  Moving forward, possession is the law.  Build on wealth you alread have in your possession.

    Wed, 09/26/2012 - 13:10 | 2832673 Winston Churchill
    Winston Churchill's picture

    Pension redemptions 10 years hence ?

    Surely you jest sir.

    We have hollow point for that.

    Wed, 09/26/2012 - 21:55 | 2834314 Slightly Insane
    Slightly Insane's picture

    I learned a new word this year.  It is re-pothication.  Ever heard of it?

    Wed, 09/26/2012 - 14:35 | 2832649 Mercury
    Mercury's picture

    Forget the pension fund examples, I'll make it even easier:


    There are good reasons not to offshore jobs even when it otherwise would be the rational choice but Uncle Sam does it even when the jobs in question are to run a new/expanded entitlement program (apparently most of us believe that the government serves us better by handing out money instead of fostering job growth... we even voted on it).

     

    But narrowly speaking, it is either economically advantageous to offshore jobs or it isn’t. This applies to a PE restructuring or the federal government farming out the processing of SNAP/EBT cards to India (via JP Morgan): http://www.theburningplatform.com/?p=28624

     The difference is that the PE firm has a pretty narrow mandate: to money for their partners, period. But the government's job is to represent the much broader interests of its constituents. 


    Also, notice how the government is pretty good at seeking out the best return on invested capital...when it come to their own benefits. 

     

    It's almost like the government has decided to unilaterally narrow its mandate to looking out for itself while also narrowing its constituent base to the large (but easy to please) bottom plus the small (but expensive) top. 

    Wed, 09/26/2012 - 13:06 | 2832651 Endgamer
    Endgamer's picture

    Nationalization FTL.

    Wed, 09/26/2012 - 13:07 | 2832655 slaughterer
    slaughterer's picture

    Mitt should use this article's argument in his campaign: I help realize your retirement dreams through my ruthless greed!

    Wed, 09/26/2012 - 14:06 | 2832873 Steaming_Wookie_Doo
    Steaming_Wookie_Doo's picture

    God help us all, that'd probably work--at least with that retiree voter segment.

    Wed, 09/26/2012 - 13:07 | 2832660 PTDBDucks
    PTDBDucks's picture

    Concepts that have been abandoned by the unelected financial aristocracy:

    A level playing field.

    Mark to Market accounting.

    Earning interest on savings.

    Retirement

    Pensions

    Realizing losses on bad investment.

    The two tier society of super-rich and everyone else has been established and is creeping into the day to day. BBC had an interesting radio topic discussing line queing and the stratification of rich/poor. At some theme parks you can buy priority wrist bands which will get you to the front of the line quicker without having to stand in line. Of course you pay a lot extra for that. A clogged highway has priority speed lanes used only by those that can afford to pay extra. Priority seating on airplanes. Special passes that get you quickly through the usual Custom lines when crossing a border. And so it goes.

    Soon we will see priority gasoline lanes for those with monthly passes.

    With unlimited money creation comes unlimited price rises. The very wealthy where money is no object will still sustain their lifestyle. As for the rest of us..... we are just another abandoned concept.

    Wed, 09/26/2012 - 13:23 | 2832719 LawsofPhysics
    LawsofPhysics's picture

    some concepts being embraced by anyone with any real productive skill set;

    -guilotine construction.

    -reloading.

    -aquaculture

    Wed, 09/26/2012 - 15:02 | 2833061 Apocalicious
    Apocalicious's picture

    And who do you think finances those guilotine contruction and aquaculture companies? MUUUAHAHAHAH!

    Wed, 09/26/2012 - 15:28 | 2833132 LawsofPhysics
    LawsofPhysics's picture

    Depends how you build it I guess.  Lots of such items laying about from my perspective.  Lots of industrial equipment and tools laying idle right now.

    Wed, 09/26/2012 - 13:08 | 2832665 905ozs
    905ozs's picture

    Meanwhile; fiat death, proper warIII breaking out, a "NWO" seemingly assured with centralized everything, a sheeple blissfully waiting to be culled.

    And so we sit.

    .......but we continue to discuss & live an unreality that presumes "this" will still exist in the future

    I blame Americans for not seeing the obvious & letting Ron Paul get slapped down, ditto the rest of the World.

    I blame the Us...the "clever knowing" for Our sanctimoniousness in talk & action. 

    I blame, most of all, that Few Elite... that have set this up and have been profiting for centuries from killing us & centralizing whatever they can.

    ....of course, around 1890 they understood a World BIS fiat was the key.
    ANOTHER WAR SHOULD DO IT :)...

    Wed, 09/26/2012 - 13:26 | 2832726 docj
    docj's picture

    But didn't you hear today's REALLY BIG NEWS??????

    The NFL and the Referees Association are very close to a deal!!

    All is well again with the world and we can all go about our blissfully ignorant lives - while we are slowly impoverished by our elected and appointed "betters".

    Wed, 09/26/2012 - 13:09 | 2832669 LULZBank
    LULZBank's picture

    OT: but... this is surely interesting. Not sure to call it ironic, hilarious or just plain vanilla fucked up.

    http://www.youtube.com/watch?v=eOH5bUmixrw

    And today they are out full force attacking the protesters!

    Wed, 09/26/2012 - 13:34 | 2832742 williambanzai7
    williambanzai7's picture

    What about all those PE assholes leeching off public employee pensions while sitting around bitching about the cost of public employees?

    One big sewer...

    Wed, 09/26/2012 - 13:56 | 2832829 PEanal_yst
    PEanal_yst's picture

    actually, we have made quite a bit of money for the pension funds. I thikn you should be asking who is leeching of of whom. 

    Wed, 09/26/2012 - 14:26 | 2832899 williambanzai7
    williambanzai7's picture

    It is a system of symbiotic hypocrisy. A combination of economic cannibalism and looking a gift horse in the mouth is how I would describe it.

    Wed, 09/26/2012 - 14:47 | 2833005 RockyRacoon
    RockyRacoon's picture

    You were kind enough not to junk him -- I wasn't -- so I did.   Not for his attitude nor opinion, but for his failure to address your point.  Conveniently enough.   His point was to say that since you called me an asshole I have the right to stab you in the neck.  The parity was missing.

    Wed, 09/26/2012 - 13:39 | 2832759 Tao Jonesing
    Tao Jonesing's picture

    This just in: "Uncle Sam" refers to the federal government.  

    This post is about a state government.  New York state is not Uncle Sam.

    There are lots of ways to make the point that Uncle Sam is the biggest enabler of offshoring of jobs.  Breathlessly talking about what the state of New York does is not one of them, however.

    Wed, 09/26/2012 - 13:48 | 2832797 PEanal_yst
    PEanal_yst's picture

    Ha, I work for one of those Funds you listed. 

    Trust me, pension funds are run by idiots. We'd much more prefer family office/Sov wealth fund money. 

    Wed, 09/26/2012 - 14:10 | 2832823 Miles Kendig
    Miles Kendig's picture

    I would love to see hard data on how the Federal Employee Retirement System or FERS is turning to PE ... and how much firms flipped by PE have elected to either fund, or fail to fund their pension obligations in both broad employee and separate executive funds with the accumulated failure to fund liability totals pawned off onto the PBGC who must then pass along those shortages in the form of additional fees to viable firms and their management/share holders as yet another tax on the success of staying in business.

    Wed, 09/26/2012 - 14:16 | 2832916 khakuda
    khakuda's picture

    There's even more to it though.  I would add that the Fed's multi decade experiment of keeping interest rates below the inflation rate the majority of the time has made it cheap to borrow which has provided the fuel and economic justification for many mergers and acquisitions.  Almost any deal makes sense with free money and M&A usually leads to layoffs and offshoring to cut costs to pay back debt.

    Wed, 09/26/2012 - 15:43 | 2833206 kevinearick
    kevinearick's picture

    So, when labor steps aside, the middle class finds itself in a vic/se of its own construction, pulling legacy capital in with it...

    Wed, 09/26/2012 - 16:13 | 2833367 riphowardkatz
    riphowardkatz's picture

    See Oregon PERS for lots more. I laugh when they talk about getting their 8% return , thats possible when slash and gash long term opportunity for short term gain. pick apart and sell off the good keep the bad alive for a future sale when value comes around

    Wed, 09/26/2012 - 18:01 | 2833815 dadichris
    dadichris's picture

    I don't see any reason to bash PE firms. The debate over wealth creation or job creation, etc. will never be settled.  But getting rid of carried interest for the GPs makes sense to me and would quiet many of the detractors.

    Wed, 09/26/2012 - 21:45 | 2834298 ECE
    ECE's picture

    Really, do we even need to evacuate more truth to this scam of a Presidency!

    Come on,  look at the green companies offshore that have received OBAMA grants!   Look at the private companies involved with drilling off the coast of South America!

    the article is interesting but not rhetorical.   Everyone that pays attention knows that not only private but public companies (GE) have incentives to go wherever they please as labor is the number 1 cost but the ultimatum is GREEN!     If you are a GREEN company taking appropriated $$$ in Zimbabwe then you are doing business at a loss for the US taxpayer.    Wow,  First time!   uhghghggg.

    ECE

    Wed, 09/26/2012 - 21:45 | 2834299 ECE
    ECE's picture

    Really, do we even need to evacuate more truth to this scam of a Presidency!

    Come on,  look at the green companies offshore that have received OBAMA grants!   Look at the private companies involved with drilling off the coast of South America!

    the article is interesting but not rhetorical.   Everyone that pays attention knows that not only private but public companies (GE) have incentives to go wherever they please as labor is the number 1 cost but the ultimatum is GREEN!     If you are a GREEN company taking appropriated $$$ in Zimbabwe then you are doing business at a loss for the US taxpayer.    Wow,  First time!   uhghghggg.

    ECE

    Thu, 09/27/2012 - 04:39 | 2834690 Sandmann
    Sandmann's picture

    Why are Dividends so heavily taxed ? Why is Debt favoured over Equity ?  Why is Limited Liability used to shield Borrowers but not Shareholders ?  That is the question a Society should ask. It is bizarre that the more Equity a business has the more solid is its ability to suvive a downturn but it is punished because Shareholders are taught to prefer CASH to Growth and Stability. The whole farce of replacing Equity with Debt leads to Rehypothecation.

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