How Private Equity Helps Pensions and FoundationsWho Benefits?

Slide 2

When a private equity firm sells one of its investments, the returns are distributed to investors.

But who invests in private equity?

Slide 3

Pension funds made up 43 percent of all private equity investment in 2013.

Pension Funds43%

Banks & Insurance16%

Foundations & En-dowments

15%

Sovereign Wealth Funds & Government Agencies

15%

Investment & Family Offices10%

Corporate Investors1%

Slide 4

Returns from private equity have translated into:

Stronger public employee pension programs

More funds for college financial aid and scholarships and more funds for research

Other causes supported by charitable foundations

Slide 5

Private equity is about long term investing and superior returns.

Pensions invest because they want to outperform the public markets, such as the S&P 500, over time.

Slide 6

Private Equity Performance Compared to Public Market Returns

“Private Equity Benchmark” shows median IRR performance as reported by Cambridge Associates and ILPA. “Pension Fund Private Equity Investments” shows the median time-weighted performance of pension fund private equity investments with publicly available information at the time of analysis (March 10, 2015). Pension fund private equity performance figures may reflect investment in other forms of alternative equities, in addition to private equity, as well as the fund manager’s ability to identify profitable investment opportunities.

1-Year 3-Year 5-Year 10-Year0%

5%

10%

15%

20%

25%

18.1

%

17.0

%

16.8

%

14.0

%

21.5

%

14.0

% 16.2

%

13.5

%

17.8

%

23.1

%

15.8

%

8.4%

19.7

%

23.0

%

15.7

%

8.1%

Private Equity Benchmark Pension Fund Private Equity Investments Russell 3000 Index Total Return S&P 500 Index Total ReturnReturn (as of 9/30/14)

Slide 7

And state pension funds across the country benefit from private equity investment.

Slide 8

Pension FundPrivate Equity Performance (as of September 30, 2014)

Pension Fund Private Equity Returns (Time-Weighted) 1-Year 3-Year 5-Year 10-Year

Alaska Public Employees’ Retirement System 17.2% 15.4% 25.2% 5.7%

California Public Employees' Retirement System N/A 12.7% 17.8% 13.2%

Colorado Public Employees’ Retirement Association 14.7% 11.8% 15.0% N/A

Florida Retirement System Pension Plan N/A 12.8% 15.3% 9.1%

Kentucky Retirement System 21.5% 14.4% 16.2% 10.3%

Kentucky Teachers' Retirement Systems 22.0% 13.8% 16.6% N/A

Los Angeles City Employees' Retirement System 20.0% 14.1% 16.3% 13.6%

Louisiana Teachers' Retirement System 17.3% 13.3% 14.0% 12.5%

Massachusetts Pension Reserves Investment Trust Fund 24.9% 17.3% 18.9% 17.8%

Minnesota State Board of Investment 23.2% 14.0% 15.7% 15.7%

Mississippi Public Employees' Retirement System 23.4% 13.0% 9.9% N/A

Nebraska Investment Council - Total Defined Benefit Plan 16.7% 11.5% 14.3% N/A

Nevada Public Employees Retirement System 22.2% 14.0% 16.2% 13.6%

New Jersey Division of Investment 22.9% 14.5% 14.7% N/A

North Carolina Retirement System 17.5% 10.0% 11.0% 8.6%

Oregon Public Employees Retirement Fund 21.5% 13.2% 16.8% N/A

Pennsylvania Public School Employees' Retirement System 15.9% 10.9% 14.2% 13.7%

Texas County & District Retirement System 23.9% 14.3% 14.3% N/A

Texas Teachers Retirement System 23.2% 15.9% 18.3% N/A

Virginia Retirement System 24.7% 15.5% 16.7% 14.8%

Washington State Investment Board 19.7% 14.9% 16.4% 13.5%

Performance figures are based on most recent publicly available information.

Public Market Returns 1-Year 3-Year 5-Year 10-Year

Russell 3000 Index (including dividends) 17.8% 23.1% 15.8% 8.4%S&P 500 Index (excluding dividends) 17.3% 20.4% 13.3% 5.9%S&P 500 Index (including dividends) 19.7% 23.0% 15.7% 8.1%

Visit www.PrivateEquityAtWork.org to find out more about the private equity industry.

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