Pension System: Georgia Employees’ Retirement System
Assets Managed: $15 Billion
PE Assets Managed: None
PE Target: 5%
Chief Investment Officer: Charles Cary, Jr.
Both Burkett and Cahyono, who each have the title co-director of alternative investments, started in November. In the years ahead, they are tasked with building up an alternative investment program from the ground up. It is not yet clear to Potvin how the alternatives allocation will be divvied up between private equity and other alternative investments.
“It’s going to be a long road,” said Potvin. “Alternative investments are an entirely new area for the state of Georgia,” he said.
Georgia had been the last state that prohibited its pensions from investing in alternatives. But last year, Gov. Nathan Deal signed a new law that for the first time allows most of the state’s pensions to invest up to 5 percent of their portfolios in alternatives. (However, the state’s largest pension, the $54 billion Georgia Teachers’ Retirement System, is not expected to enter the asset class in the near future.)
The new law allows most state pensions to invest up to 1 percent of their assets in alternative investment per year, so that building such a portfolio will be done slowly and conservatively. In the case of Georgia Employees’ Retirement System, that would amount to no more than $140 million in commitments per year. Potvin, in fact, said that he would “be surprised” if his pension invested the full $140 million in 2013.
Potvin said that both Burkett and Cahyono have started creating the basic tools and infrastructure needed to make sure that such investments can be easily vetted and properly tracked. He said his system wouldn’t make its first commitments “for a number of months.”
Prior to joining Georgia Employees’ Retirement System, Burkett worked at Baltimore-based Camden Partners, a growth equity investor. Cahyono previously worked at Philadelphia-based Delaware Investments.
At full staff, the alternative investment staff is expected to have fewer than five full-time members. “We don’t need an army of analysts,” said Potvin.