Pension Fund With $54 Billion Seeks Private-Equity Scouts

  • MLC is hiring two PE specialists to search for investments
  • Global PE funds raised $101 billion in second quarter: Preqin

Australia’s second-biggest pension fund is expanding its private-equity team as it plans to boost returns at a time of high valuations in stocks and low bond yields.

MLC Ltd., which oversees more than A$70 billion ($54 billion) in pension assets, is looking to hire two PE fund managers who will be based outside Australia and will scout for investment opportunities, according to Chief Investment Officer Jonathan Armitage. This comes after David Seebold, who was previously in the Sydney PE team, was posted to New York as MLC looks to spend a cash pile that’s at the highest level since the financial crisis in some of its portfolios, Armitage said.

Armitage is scouring the globe for options on where to spend his next dollar as Australia’s pension pool, the world’s third largest, is forecast to grow to A$4 trillion within the next decade. With yields below zero on more than $10 trillion worth of bonds and global equity valuations close to all-time highs, MLC expects to increase its investments in private equity and other alternative assets in the next two years.

“Returns from the private equity part of the portfolio continue to be very robust,” Sydney-based Armitage said in an interview Friday. “We’ve got what I would describe as a pretty healthy pipeline of potential investment opportunities.”

Expanding Teams

The private-equity industry, which makes long-term investments such as leveraged buyouts in operating companies, raised $101 billion during the second quarter of 2016, according to data compiled by Preqin. It is only the fourth time that fundraising has exceeded $100 billion since the first quarter of 2008, the data showed.

Around 47 percent of investors said private equity remained their asset class of choice among alternative investments last year, a survey by Ernst & Young LLP showed. Infrastructure was favored by 21 percent and 16 percent favored real estate.

MLC’s expansion of its private-equity team is just one part of wider growth across its investment teams. Earlier this year, the company appointed former CLSA Ltd. analyst John Woods as a portfolio manager to work with Susan Gosling, head of investment management at MLC, a unit of National Australia Bank Ltd.

“We’ve continued to build up our risk and analytics capabilities and also our derivatives capabilities,” Armitage said.

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