New York City to Double Private Equity Investment

March 28, 2005 (PLANSPONSOR.com) - The New York City pension fund is planning to double its $2.2 billion private equity portfolio in the next three to five years, the New York Post is reporting.

The New York City Employees’ Retirement System (NYCERS) – which invests pension money for teachers, firemen, police and correction officers – is seeking greater diversification and investment returns, according to the Post. Recently, New York City has invested in firms such as Apollo, JP Morgan Partners, Blackstone Capital, FdG Capital Partners, Silver Lake Partners, and Yucaipa American Alliance.

The move follows a further increase to private equity across the Hudson River; in November, New Jersey, which previously only invested in stocks and bonds, chose to move 4% of its pension fund into private equity investments. Although no allocation has yet to be made,  about $3 billion is expected to be shifted to such investments in the Garden State. New Jersey saw its fund dwindle from $84 billion to $57 billion in just three years.

Private equity vehicles are expected to raise $250 billion in the coming year, almost double last year’s figure, according to the Post. Although they can produce higher returns than regular investments, they often have lock-ups of up to 10 years, and are much less transparent and are not closely watched by regulators. Both New York City and New Jersey are relatively late players in the private equity game; other pension systems, such as California’s main fund, have been in them for some time now.

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