Future Fund's private equity commitments surge

The Australian sovereign wealth fund committed A$6.4bn to nine managers in the year to 30 June 2009. Capital invested in the asset class has jumped to A$1.24bn from A$2m the previous year.

Australia’s A$54 billion ($49 billion; €33 billion) Future Fund committed A$6.4 billion to nine new private equity fund managers in the 12 months prior to 30 June 2009, according to its annual report which was published yesterday. This brings its total commitments to the asset class to A$7.6 billion.

The nine new managers are Adams Street Partners, Apax Partners, Charterhouse Capital Partners, HarbourVest, Hellman & Friedman, Montagu Newhall, Nordic Capital, Oaktree Capital Management and TowerBrook. They join existing managers Advent International Corporation and Horsley Bridge Partners.

As of 30 June 2009, the sovereign wealth fund had A$1.24 billion – or 2.3 percent of its assets – invested in private equity, up from just A$2 milion across two managers the previous year, according to the report.

Of the A$1.2 billion invested in the asset class in the year to end of June 2009, the majority was called down by private equity managers focused on distressed opportunities, the annual report noted. In total, the fund committed A$4 billion to distressed investment strategies, including private equity and credit and distressed debt. Credit and distressed debt managers the fund has committed to include Canyon Capital Advisors, Centerbridge Partners LP, King Street Capital and Sankaty Advisors.

In February, Future Fund, GIC and one other sovereign wealth fund acquired a stake of roughly 10 percent in Apax Partners’ management company. The net proceeds from the stake sale were to be re-invested in a permanent capital vehicle to invest in Apax funds in which the Future Fund would have a 10 percent stake, the sovereign wealth fund said in a statement at the time.

The Future Fund was set up in 2006 to help the Australian Government meet the cost of pensions paid to retired civil servants. It was seeded with Telstra shares and surplus government budget money.