Kansas reduces PE pacing after lowering return expectations

  • $17.6 bln pension to commit $350 mln to $450 mln this year
  • Kansas projects hitting 8 pct allocation target in 2020
  • Kansas backs new Apollo, NEA flagship funds

Kansas Public Employees Retirement System downshifted on its plans for private equity this year after reducing its assumed rate of return by 0.25 percentage point, spokeswoman Kristen Basso told Buyoutsin an email.

The $17.6 billion retirement system will likely commit $350 million to $450 million to private equity this year, a $50 million reduction from the $400 million to $500 million range it set in November, according to a Pavilion Financial Corp report obtained via open-records request.

Kansas in December lowered its assumed rate of return to 7.75 percent from 8 percent. The adjustment has a knock-on effect on the pension system’s PE-pacing model, which projects cash flows and commitments for the portfolio and enables Kansas to plan how much it will allocate each year.

The new commitment pace should accommodate Kansas hitting its 8 percent target allocation for private equity by 2020, Kansas’s Pavilion report shows. The retirement system held 4.7 percent of its assets in PE as of Sept. 30. The bulk of its portfolio was in North American buyout assets.

Kansas approved a pair of commitments to new private equity and venture capital funds at its meeting earlier this month, Basso said.

The larger of the two, as much as $75 million, went to Apollo Global Management’s new flagship fund, which could be the largest traditional buyout fund ever raised, Oregon Investment Council documents reported recently. The firm has yet to set a hard cap for the fund.

Kansas also committed as much as $50 million to New Enterprise Associates 16, which is targeting $3 billion for venture capital investments.

Action Item: More about Kansas and its investment holdings: www.kpers.org