Arizona Public Safety makes first move into secondary market

  • PSPRS eliminates relationship with Blackstone, Apollo
  • Sale includes stakes in Blackstone V, Apollo VII
  • PSPRS has 15 pct allocation to PE

Public Safety Personnel Retirement System of the State of Arizona made its first foray into the secondary market, selling stakes in pre-crisis flagship funds managed by Apollo Global Management and Blackstone Group.

The sale included $105 million of fund commitments, $85.6 million of which was already drawn, spokesman Christian Palmer said. The retirement system declined to disclose proceeds generated by the sale. The identity of the buyer or buyers could not be determined.

The $23 billion retirement system completed the sale on March 31, pension documents show. As of June 30, 2015, Arizona Public Safety’s stake in Apollo Investment Fund VII had $27.1 million in fair value. The pension fund’s stake in Blackstone V was worth $19.3 million fair value.

The fund stakes represented Arizona Public Safety’s only fund investment with either firm, according to a summary of portfolio holdings.

Apollo VII netted a 23.9 percent internal rate of return and 1.6x multiple through Dec. 31, according to California Public Employees’ Retirement System records. Blackstone’s fifth flagship fund netted a 7.8 percent IRR and 1.5x multiple as of the same date.

The Arizona system had a 15 percent allocation to PE as of June 30, retirement system documents say. The portfolio delivered a five-year return of 15.1 percent, beating both its public-market and private-market benchmarks.

Action Item: More about Public Safety Personnel Retirement System of the State of Arizona:

A wildland firefighter extinguishes a hot spot on the eastern edge of the Wallow Wildfire outside Alpine, Arizona, on June 13, 2011. Photo courtesy Reuters/Jim Urquhart