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Watch and Learn

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Public Servants Depend on Private Equity Returns

How exactly does private equity help local teachers in Los Angeles or police officers in Florida? Private equity firms partner with their investors – which include public pension funds – to buy companies and work to improve their performance, creating jobs and long-term value in the process. The returns from these ventures go directly to the firm’s investors, most of whom are public pension funds.

As of 2021, 34 million American public servants depend on private to support their retirements, while 89 percent of public pension funds invest at least part of their portfolio in private equity.

Hear directly from officials from public pension funds and university endowments about why they invest in private equity:

Private Equity Delivers for Ohio 

More than 233,000 Ohio janitors, bus drivers, cafeteria workers, and other educational workers depend on returns generated by the Ohio School Employees Retirement System (Ohio SERS) to secure their well-earned retirements. Fortunately, Ohio SERS’ private equity investments delivered an astounding 17.6 percent return over a ten-year period. According to Ohio SERS CIO Farouki Majeed, “We are very much focused on returns, that is how we look at opportunities. Our private equity return as of the end of June 2021 was 17.6% over ten years. As of December, it’s 19.2% over ten years. The 10-year total fund return is 10.5%. So, we were able to get to 10.5% primarily because of very solid private equity returns of 19.2%.” Farouki also went on to say that Ohio SERS would be increasing their private equity allocation to generate additional high returns.

Private Equity Investments Generated an Additional $2.5 Billion for Missouri Teachers

Craig Husting, Chief Investment Officer (CIO) for the Public School and Education Employee Retirement Systems of Missouri (PSRS/PEERS), discusses how the pension’s private equity investments have generated billions of dollars for Missouri education employees.

Illinois State Board of Investment Earns Highest Private Equity Returns

Johara Farhadieh, Executive Director and Chief Investment Officer (CIO) of the Illinois State Board of Investment (ISBI), discusses how private equity generated outsized returns for the 165,000 state park employees, frontline workers, public health officials, and other dedicated public servants in Illinois.

Generating Record Returns for West Virginia’s Public Servants

Jim Herrington, the Private Equity Investment Officer for the West Virginia Investment Management Board (WVIMB), discusses how West Virginia’s teachers, first-responders, public employees, and other public servants benefitted from a 16.06 percent annualized 10-year return from the pension fund’s $2.2 billion private equity allocation. Herrington concludes the interview by recommending that the chief investment officers of public pension funds across America should investigate the long-term benefits of investing in private equity.

California Public Employees Retirement System CEO Marcie Frost – “As we enter the new year, we’ll concentrate on implementing the new mix of investments … includes increasing investments in the private markets, which investment experts project will offer some of the highest returns over the long term.”

University of California System Annual Report – UC Investments began investing in private equity more than 40 years ago … We started small, but we learned big … Today UC Investments’ private equity program sums to almost $12 billion in net asset value, with a total of $17 billion committed to date as we continue to execute a successful co-invest and funds strategy. In the endowment, the size of our private equity holdings has already grown by 379% since 2014 and by 118% in the pension.”