New pools of capital open for private equity

Several institutions have carved out - or considered creating - space for private equity for the first time, countering a retreat by struggling LPs with more experience in the asset class.

Several institutions have carved out, or considered creating space, for their first-ever allocations to private equity in recent weeks, bringing hope to GPs struggling to find capital in an anemic fundraising environment.

One of the biggest institutions is Norway's massive sovereign wealth fund, which has about $409 billion in assets. The fund, called the Government Pension Fund Global, is working on creating an investment programme that targets environmental-related opportunities that would include private markets, and investments in liquid equities and bonds.

Norway's finance ministry also is considering allocating capital to private equity and infrastructure funds for sustainable investment opportunities in emerging markets. The nation's central bank, Norges Bank, is assessing the opportunity and will make a recommendation in the fall, a spokesperson told PEI.

Recently, South Korea's sovereign wealth fund announced it is looking to increase its exposure to private equity, ramping up its allocation to 20 percent. The Korea Investment Corporation, with $30 billion in assets, in July made its first foray into private equity investing, dedicating about $1 billion to investments in alternatives, including buyouts, distressed, growth and venture capital and real estate.

Another institution to open up to private equity is the UK's Pension Protection Fund (PPF), which carved out 20 percent of its pound 3.9 billion (Euro4.3 billion; $5.9 billion) in assets for alternative investments, including private equity, property, infrastructure and absolute return funds.

PPF has already moved on new strategy, hiring seven managers to run a secondaries investment portfolio. It's not clear how much the portfolio will have to make secondaries investments. PPF hired Goldman Sachs, Hamilton Lane, Lexington Partners, LGT Capital, Partners Group, Pantheon Ventures and RREEF Alternative Investments.

To read more about new pools of capital, check out the April issue of PEI.