Alaska takes $73 mln stake in Kelso reinsurance investment

Alaska Permanent Fund Corp inked more than $100 million of private equity co-investments in recent months, documents from the $57.3 billion sovereign-wealth fund show. The materials were released in connection with its Feb. 22-23 Board of Trustees meeting.

Alaska’s largest individual co-investment was a $73 million stake in Premia Holdings, a new reinsurer that earlier this year raised $510 million from an investor group led by PE firm Kelso & Co and Arch Capital Group.

An affiliate of Arch Capital, a Bermuda insurance and reinsurance group, will act as a partner to Premia on larger transactions, a news release said.

Alaska also committed $20 million to HealthSun, a Florida healthcare provider acquired by Summit Partners last year, and $10 million to Insight Venture Partners’ portfolio company Ministry Brands. Ministry is a software-as-a-service provider of content-management and payment systems for faith-based organizations and educational institutions.

Alaska’s co-investment holdings, which are part of the $1.57 billion of PE commitments that the wealth fund’s internal staff manages, generated a 36.8 percent internal rate of return as of Sept. 30, the report says.

Limited partners have increased their average allocations to co-investments and direct investments each year since 2012, according to CEM Benchmarking data cited by McKinsey in its most recent PE annual review. General partners often offer co-investments on a no-fee, no-carry basis, which enables LPs to access PE returns at considerably lower costs.

Recent allocations to co-investments effectively eliminated the J-curve on private equity commitments Alaska made in 2015, the report says. Alaska’s 2015 portfolio had generated a 35.4 percent IRR as of Sept. 30, beating the Burgiss median IRR for 2015 vintages by 37.5 percentage points. More than 90 percent of the gains generated by Alaska’s 2015 vintage investments were from co-investments.

In addition to its co-investments, Alaska also allocated $232 million to traditional PE funds and a $100 million anchor commitment to Whitehorse Liquidity Partners’ debut fund, pension documents say.

New private equity commitments included allocations with flagship funds managed by Quad-C, Stone Point Capital and Vista Equity Partners, according to Alaska documents. Alaska’s committed more than $11.4 billion to PE since its inception, netting a 14.1 percent IRR.

Action Item: More about Alaska Permanent Fund: www.apfc.org/home/Content/home/index.cfm