Virginia Retirement System Commits More than $3B to 18 Managers; Terminates 2 Others

By David G. Barry

The Virginia Retirement System (VRS) has had a busy past four months, committing $3.46 billion to 18 managers while terminating two who managed nearly $1.5 billion.

News of the new commitments came as the $101 billion system said it generated a gain of 0.6% versus its benchmark of -5.5%. With that result, VRS joins a small group of large public pension funds that were able to generate gains during the 2021-22 fiscal year.

According to a report presented at the August VRS Investment Advisory Committee, $1.65 billion – or nearly half of the total committed – went to 11 private equity managers. It committed $200 million each to Advent International GPE X, Apax XI, Audax Private Equity Fund VII and Apollo Investment Fund X.

VRS’s smallest commitment was $40 million to the lone venture capital fund in the group – Matrix Partners XII. VRS Chief Investment Officer Ronald S. Schmitz told the board that VRS has moved away from venture capital over the past decade as its looked to invest larger amounts of capital. Matrix, he said, is a firm that it has long backed and helps – along with a few other venture investments – to give VRS staff a view of the growth equity sector.

VRS also committed $175 million to Green Equity Investors IV; $150 million to Veritas Capital Fund VIII and HIG Advantage Buyout Fund II; US$121.6 million to Bain Capital Europe VI; and $100 million to Thoma Bravo XV and Vista Equity Partners Fund VIII.

Within private credit, VRS committed $450 million to both Magnetar Diversified Credit and Värde Diversified Credit.

Within real assets, it deployed $675 million: $250 million to Blackstone Real Estate Partners X, $200 million to EIG River Energy Partners, $150 million to iCON Infrastructure Partners VI, LP and $75 million to True Green Capital Fund IV.

On the public equities side, VRS said it hired CET Energy Dynamics Fund for a $200 million commitment while terminating two funds run by Nordea, totaling $1.47 million. VRS did not disclose a reason for terminating the two Nordea funds.

VRS over the last four months also has brought aboard its next CIO: Andrew Junkin, who has been the CIO of the State of Rhode Island. Schmitz announced in November that he will be retiring at the end of 2022. He has been CIO of VRS since 2011.

The system serves more than 750,000 active and inactive members, retirees and beneficiaries.