The Washington State Investment Board is looking to reduce its allocation in private equity, cutting the targets from 25 percent to 23 percent, according to a report in PEHub.com. The WSIB managed $91.4 billion in assets as of June 30 on behalf of retirement plans for public employees, teachers, school employees, law enforcement officers, firefighters and judges.
Meanwhile, the WSIB is looking to increase the targets for real estate assets, from 13 percent to 15 percent.
In June of 2012, the private equity portfolio stood at $16.1 billion and represented 26.02 percent of the Commingled Trust Fund. That was up from 25.09 percent in 2011 when the portfolio was valued at $15.6 billion.
PEHub notes that the changes still must meet approval, and a spokesperson tells the publication that it is not “backing away” from private equity but instead is focusing on “quality” opportunities. The spokesperson also noted that the total dollar amounts being committed in private equity continue to go up on an annual basis.
The minutes from the most recent meeting are not yet posted online.
The WSIB has taken some heat in the past for not putting more of its money into assets that could bolster the regional economy, and the board’s investments in Washington state venture capital firms is rather sparse. It is not an investor in the funds of Madrona, Ignition or Voyager Capital, though it has in the past backed OVP Venture Partners (which is in the process of winding down) and Frazier & Co. It also has an investment in Seattle private equity firm Evergreen Pacific Partners.
Interestingly, at the Zino Zillionaire Investment Forum earlier this month Seattle angel investor Geoff Entress said that state government should do more to support startups.
“I would really like to see more from the public sector, from the state government doing more,” said Entress, who has invested in more than 100 startups over the years. “I have become more active in the past few years up in Vancouver and the British Columbia government has a long history of doing a lot to help startups, from outright grants, which most of my companies receive up there to R&D tax rebates…. For every dollar we spend on research and development, we get 40 cents back from the federal and provincial government up there. So, I”d like to see some programs like that down here as well.”
UPDATE: I asked the WSIB for a few more details about the allocation changes, and here’s what they said via email:
• The increase to the real estate allocation is consistent with the Board’s commitment to private markets investments and maintains the Board’s overall allocation to these investments (i.e. private equity, real estate, and tangible assets).
• The size of the private equity portfolio continues to grow in terms of capital being put to work every year as the investment portfolio grows. The reduction in the long-term target brings the private equity target in line with its actual current allocation. The purpose of the reduction is to make sure WSIB maintains the quality of the program as its absolute size continues to grow over time.