NY Common sticks with PE amid scandal investigation

The pension’s $200m commitment to Hellman & Friedman, is evidence that it plans to continue to back private equity funds despite an ongoing pay-to-play investigation.

The New York State Common Retirement Fund disclosed that it committed $200 million to Hellman & Friedman’s seventh fund, which closed in October after collecting $8.8 billion.

Hellman & Friedman did not use a placement agent to solicit the investment from New York Common, which made the commitment in September. The firm’s seventh fund is focusing on investments between $300 million and $1.2 billion, primarily in the US and Europe.

The $116.5 billion pension has been in the center of a pay-to-play scandal under which political operatives allegedly strong-armed investment firms to pay them in exchange for commitments from the pension.

Related investigations over pension pay-to-play have sprung up in New Mexico and California.

In the wake of the scandal becoming public knowledge in March, New York Common initiated several reforms to try and prevent similar behavior for happening again. The pension banned the use of placement agents by investment firms seeking commitments and initiated a review of its investments.

New York Attorney General Andrew Cuomo recently introduced legislation that would convert New York’s single-fiduciary pension model into a board structure. The pension is currently overseen by New York Comptroller Thomas DiNapoli.

The US Securities and Exchange Commission is considering a nation-wide ban on the use of placement agents by investment firms to solicit investments from public pensions.

Amid the clamor of the scandal, New York Common has continued to invest in private equity. The pension committed $100 million to TA Associates eleventh fund in July and $50 million to Falcon Strategic Partners, targeting $750 million, in June. TA XI closed on $4 billion in August.