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Selected Case

published: 29 May 2017

Abstract:
In 2011, Partners Group is nearing the end of a year-long quest for a new mandate from a European pension fund, Future Plan. The fund has struggled with its 6-year old PE programme, consistently falling short of its target allocation to the asset class and generating poor returns, seemingly always one step behind the opportunity in the market. Future Plan has built its PE programme by investing in closed-end funds of PE products managed by two executives, one focused on European markets, the other on global markets. But the fallout from the global economic crisis wreaked havoc with Future Plan’s PE programme and something has to change. With an interest in expanding its PE activity to include secondary and direct investment strategies, Future Plan begins a manager search process with one goal in mind: to achieve the target return to the asset class by 2014. The case charts Partners Group’s role in the selection process and how its expertise and services, along with a novel holding structure, offer a way to achieve Future Plan’s goals.

Pedagogical Objectives:
This case provides a ringside seat to follow the actions taken by a medium-sized pension fund when managing its private equity portfolio allocation. Students explore the rationale behind making investment decisions, the key challenges faced by institutional investors when constructing and managing a PE portfolio, and compare the characteristics of primary, secondary and direct PE investments. The case provides data and a step-by-step guide for students to develop an investment strategy (across these three categories) that will enable Future Plan to hit its target allocation to PE by year-end 2014 and achieve its goals.

Keywords:
Private Equity, Partners Group, Pension Fund, Institutional Investor, Portfolio Construction, Portfolio Management, Portfolio Optimization, Target Asset Allocation, Global Financial Crisis, Direct Investment, Secondary Investment, Primary Fund Commitment, Limited Partner, Private Equity Programme


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