Ireland’s NPRF starts private equity programme

IRELAND – The €14.5bn National Pension Reserve Fund has initiated its new investment programme with a €75m private equity commitment with independent buy-out firm CVC Capital Partners.

The investment is in the CVC European Equity Partners Buyout Fund.

The diversification of the NPRF’s investment strategy – announced in February 2005 with the aim of exploiting sources of additional long-term return - includes an 8% allocation to private equity to be phased in up until 2009.

This is likely to involve investments of around €2bn over this period, according to an NPRF spokesperson.

“Private equity has the potential to generate significant additional return due to investor compensation for such factors as longer investment horizons and lack of liquidity,” he stated.

“A long-term fund such as the NPRF which has no drawdown until 2025 and has significant cash inflows from the Government is well positioned to benefit from this potential additional return.”

European private equity buy-out funds returned on average 12.3% last year, according to the European Private Equity & Venture Capital Association.

The NPRF stated that investment would primarily be through direct investments in funds, but did not rule out possible investment through funds of funds - “particularly in the venture capital area where direct access to the best managers may be more difficult”.

Established in 1981 as Citicorp’s European private equity arm, CVC initiated its own management buy-out in 1993. According to a report at the start of the week, the firm targets medium and large companies.

“The NPRF is currently exploring a number of other investment opportunities,” said the spokesperson.