Monte Tarbox, chief investment officer of the New York City Retirement Systems (NYCRS), which manages $330bn in pension assets, has said he is "losing confidence" that private equity general partners expanding into the retail market are keeping pension funds at the core of their strategic operations.
Tarbox's comments reflect growing unease among large institutional investors about private equity firms courting individual investors. Pension funds have long been among the anchor investors in private equity, providing the bulk of the capital that fund managers deploy. As GPs seek new sources of capital by opening vehicles to retail investors, some institutional allies worry that their own priorities are being sidelined.
Tarbox's view is that it is "absurd" for private equity managers to pursue retail capital while neglecting the institutions that built their franchises. The concern centres on whether the commitments, terms and strategic focus that pension investors expect will be preserved as firms grow their retail businesses.
The remarks come as the private markets industry continues to explore new distribution channels. For long-term institutional investors such as NYCRS, the question is whether the relationship between pension funds and fund managers remains aligned as the industry broadens its client base.
Source: PE International · Summarized by HeadlinesBriefing