Catholic Super to tap Chindia with private equity

The $2.7 billion Catholic Superannuation Fund has made a $40 million commitment to a New York-based private equity manager to increase its exposure to the emerging markets of China and India.

Catholic Super chief investment officer, Tim Hughes, said the $40 million commitment was made to Sigular Guff’s BRIC Opportunities Fund II to get some exposure to the China and India growth story, which looked set to continue. “Our view is that those economies’ growth rates will significantly exceed the rest of the world for the foreseeable future,” he said. The commitment represents Catholic Super’s first venture into unlisted assets for both markets. But Hughes said it was a better option than increasing listed markets exposure, as governance and investment oversight of the private equity manager was better. The commitment will sit within Catholic Super’s private equity portfolio, which currently sits just under 4 per cent of the total fund. Hughes said the investment decision was made with an eight to 10 year time horizon in mind and funding the commitment was “not an issue”, given the elongated draw-down period and small initial funding requirement. The draw-down structure also meant the total $40 million may never be fully invested, Hughes said, as assets are realised and capital is returned to the manager. As such, Hughes said he hoped the actual exposure would be at least $20 million to $25 million, the minimum for a Catholic Super mandate. “With private equity, you struggle to get 50 per cent to 60 per cent of your mandate actually invested.” Sigular Guff is still gathering commitments at this stage, according to Hughes, and as such has not yet drawn on Catholic Super’s commitment. Its first BRIC Opportunities Fund is understood to manage around US$610 million. Hughes attended a week-long investment trip to India last October with the US private equity manager.