Memorandum to: State Investment Council
From: Timothy Walsh, Director
Subject: Proposed Investment in Neuberger Berman/New Jersey Custom Investment Fund II (“NB/NJ Custom Fund II”)
The New Jersey Division of Investment (“Division”) is proposing an investment of $200 million in Neuberger Berman/New Jersey Custom Investment Fund II (“NB/NJ Custom Fund II”). This memorandum is presented to the State Investment Council (the “Council”) pursuant to N.J.A.C. 17:16- 69.9.
As part of NJDOI’s separate account mandate to achieve attractive risk adjusted returns while promoting economic benefits within the State of New Jersey and Northeast region, staff and SIS are recommending a commitment to NB/NJ Custom Fund II. A report of the Investment Policy Committee (“IPC”) summarizing the details of the proposed investment is attached.
Division Staff and its private equity consultant, Strategic Investment Solutions, undertook extensive due diligence on the proposed investment in accordance with the Division’s Alternative Investment Due Diligence Procedures.
As part of its due diligence process, staff determined that the fund has not engaged a third-party solicitor (a “placement agent”) in connection with New Jersey’s potential investment.
We will work with representatives of the Division of Law and outside counsel to review and negotiate specific terms of the legal documents to govern the investment. In addition, the proposed investment must comply with the Council’s regulation governing political contributions (N.J.A.C. 17:16-4).
Please note that the investment is authorized pursuant to Articles 69 and 90 of the Council’s regulations. NB/NJ Custom Fund II will be considered a “buy–out” investment, as defined under N.J.A.C. 17:16- 90.1.
A formal written due diligence report for the proposed investment was sent to each member of the IPC and a meeting of the Committee was held on January 18, 2012. In addition to the formal written due diligence report, all other information obtained by the Division on the investment was made available to the IPC.
We look forward to discussing the proposed investment at the Council’s January 26, 2012 meeting.
Source: State of New Jersey State Investment Council