Alaska set to chase unique private equity structures

  • Includes $350 mln for structured PE
  • Structured category includes separate accounts
  • SWF earmarks $900 mln for traditional PE

Alaska Permanent Fund Corp approved a private-markets investment plan calling for as much as $900 million of commitments to private equity in the fiscal year starting July 1.

Staff can “flex” an additional $200 million to PE based on the quality of opportunities, according to May 24-25 meeting materials. The FY 2016-2017 investment plan also carves out as much as 25 percent of the $900 million for co-investments.

Separately, Alaska’s plan earmarked $350 million for structured PE commitments. The meeting materials describe this as “fund commitments with unconventional benefits or structure” like pre-negotiated co-investments, an ownership interest in the GP or a revenue-share agreement. As with traditional PE, Alaska can flex another $200 million to its allocation.

Should Alaska pledge its expected allocations in PE and structured PE, the total commitment pace would be roughly 40 percent higher than the target it set for FY 2015-2016, which concludes at the end of June.

As of this week, the $52.7 billion sovereign-wealth fund was within shouting distance of the $900 million pace it set for the current fiscal year.

Alaska committed $869 million across 27 funds as of May, according to its meeting materials, including allocations to five new GP relationships; American Industrial PartnersKelso & CoL CattertonLeonard Green & Partners and Ridgemont Equity Partners.

Beyond private equity, Alaska also slated $350 million each for investments in infrastructure and private credit. Its allocation to infrastructure could be flexed to $550 million if market opportunities emerge.

The sovereign-wealth fund can also invest as much as $800 million in special opportunities. Previous special-opportunities commitments included $1.1 billion to Dyal Capital Partners’ third fund, which acquires stakes in PE management companies, and a stake in American Homes 4 Rent.

Alaska Permanent Fund held an 8.3 percent exposure to PE as of March 31, according to its meeting materials. The portfolio returned 12 percent since inception and delivered positive performance in 27 of the past 29 quarters.

Action Item: APFC’s announcement: