Iowa PERS Taps Pathway To Invest $650M In PE

Pension System: Iowa Public Employees’ Retirement System

Assets Managed: $24 Billion (Sept. 30, 2012)

PE Assets Managed: $3 Billion (Sept. 30, 2012)

PE Allocation (Target): 12.4% (13%) (Sept. 30, 2012)

Chief Investment Officer: Karl Koch

Many public pensions, like IPERS, outsource their private equity investing to third parties, such as Pathway, whose main business is managing private equity funds of funds. Pathway, which has been the sole manager of IPERS’s private equity program since 1993, has full discretion to make fund selections based on criteria that were laid out by the pension’s board. IPERS began its relationship with Pathway in 1991.

IPERS currently oversees $3 billion in private equity, or about 12.4 percent of the pension’s overall assets. That is just shy of the pension’s 13 percent target for the asset class. Roughly 70 percent of IPERS’s private equity portfolio is invested in buyouts, about 20 percent is in venture capital and about 10 percent in invested debt related strategies.

Calls requesting comments from Pathway, based in Irvine, Calif. and West Warwick, R.I., were not returned. No specific fund commitments were announced at the Dec. 6 board meeting, according to a review of the discussion.

Although the pension did not break out the performance of its private equity portfolio, IPERS did report that the system overall had returned 14.85 percent overall for the year through Sept. 30, 2012. Its 10-year average annual return was 8.47 percent, above the pension’s 7.5 percent assumed rate of return.

IPERS is the largest public pension in Iowa with more than 335,000 members.