Ireland pension boosts alternatives allocation to 33%

Ireland’s National Pensions Reserve Fund has increased its targets to private equity and infrastructure for increased exposure to asset classes “more likely to deliver superior longer term growth and to protect against longer term inflation”.

Overall, NPRF’s target allocation to alternatives, including hedge funds, increased to 33 percent from 21 percent.

“The main feature of the updated investment strategy are a reduction in the fund’s quoted equity weighting and enhanced diversification through the inclusion of some new asset classes and increased weightings to others which are more likely to deliver superior longer term growth and to protect against longer term inflation,” the pension said in a statement.

The pension, which has just over €24 billion in assets, increased its target allocation to private equity to 10 percent from 8 percent of total fund assets. Its actual allocation to the asset class stands at 3.3 percent of total fund assets. Last year, the pension did not make any commitments to private equity managers. This year, so far, NPRF has committed to HIG Bayside Loan Opportunities Fund II and Atlantic Bridge II. In the past, the pension has committed to TPG, Clayton Dubilier & Rice and Oaktree Capital Management, among others.

NPRF devotes most it private equity capital to buyout managers, but also invests in venture capital, with a small portion of the allocation left over for “other” investment categories within private equity. At the end of 2009, the pension had investments with 39 private equity vehicles across 26 firms, according to its annual report.

The pension also increased its target allocation to infrastructure to 5 percent from 2 percent. No information was available about the pension’s actual allocation to infrastructure, and it’s not clear if NPRF has actually committed to an infrastructure manager yet. A pension spokesperson did not return a request for comment by press time. 

The pension’s target to real estate remains unchanged at 8 percent.

Nick Ashmore, formerly of Adams Street Partners, heads private equity for the National Treasury Management Agency, which manages the pension assets. The pension also is supervised by a commission, which includes John Canning, chairman of Madison Dearborn Partners. The pension has a commitment with Madison Dearborn Partners V.