Alaska Permanent: PE strong in H1 as volatile public market pressured returns

  • AUM: $60.4 bln
  • Target allocation to PESO: 14 pct
  • Actual allocation to PESO: 13.5 pct
  • Whom to contact for a meeting: Paulyn Swanson (
  • Why this is important: Alaska Permanent’s PE portfolio continues to be a top performing asset class

Alaska Permanent Fund’s private equity portfolio posted the highest fiscal-first-half return among all asset classes, even as public-market volatility drove down its total returns to negative 3.19 percent.

In addition, its $1.6 billion co-investment portfolio, which has generated returns of 63.4 percent annually since inception in 2014, was a significant contributor to the PE results, a news release said.

Alaska Permanent’s $8.2 billion PE and special-situations portfolio returned 11.86 percent over the six months ended Dec. 31, 2018.

In comparison, public equities, which accounted for $23.2 billion (39 percent) of the $60.4 billion portfolio, returned a negative 10.9 percent, Alaska documents said.

The sovereign fund committed $664 million, mainly re-ups, across 15 PE and special-situations funds and $302 million in direct investments in fiscal Q1.

Commitments included $40 million to Thoma Bravo’s 13th fund, $35 million to Vista Equity Partners’ seventh fund, $60 million to Hellman & Friedman’s ninth fund, $50 million to Providence Equity Partners’ eighth fund, $60 million to TCV’s 10th fund, $75 million to JMI Equity’s ninth fund and $75 million to Ridgemont Equity Partners’ third fund.

Alaska’s PE and special-situations portfolio was largely U.S.-focused. At 20.73 percent, Europe was the largest non-U.S. sector, according to the fund’s 2018 annual report.

The sovereign fund’s PE portfolio included buyouts (52.2 percent), venture/growth capital (24 percent), special situations (21.4 percent) and distressed/restructuring (2.35 percent), the report said.

Alaska Permanent’s PE priorities for FY 2019 include internationalization, consolidating its preferred GP relationships, maintaining steady pacing and enhancing staff efforts on sourcing and diligence, fund documents show.

All in, the PE portfolio returned 20.41 percent over one year, 20 percent over three years and 17.58 percent over five years for the periods ended Dec. 31, 2018.

Action Item: Read more on Alaska Permanent’s PE portfolio: