LP news briefs, week of July 28, 2008

Maine ponders RFP

The Maine Public Employees Retirement System is mulling whether to build a private equity staff or hire outside advisers to reach its new 5% allocation to private equity, says CIO Andrew H. Sawyer. The board in mid-June approved the target allocation, which is expected to be reached over the next two to five years.

At one of his first board meetings, Sawyer—who joined in February—gave a presentation on asset-allocation theory. Over the following months, the board considered new asset classes, reviewed an asset-liability study and evaluated various asset allocation scenarios. The result was that the state pension fund approved a new target allocation, as well as a 5% allotment to infrastructure, up from 4 percent.

“We know we need to have more experienced investment talent to properly implement the program,” Sawyer says. “Whether we build an internal team or buy external advice is an ongoing discussion.”

He says that it’s possible the pension fund might put out a request for proposal (RFP) in the next three months.

The new program will likely be diversified to include venture capital, buyouts, distressed specialists and mezzanine, but no ranges have been discussed, Sawyer says.

Sawyer previously worked as a vice president for the Stratevest Group, an investment advisory and financial planning subsidiary of Banknorth Group. Before that, he was manager of pension and investments at Raytheon Co.

Sawyer is the third head of investments at Maine Public Employees Retirement System since 2005. Previously, the state pension fund had a director of investments, Michael Simmons, who served in that capacity for about a year. Simmons replaced Rex Holsapple, who was CIO for several years.

In addition to the Maine Public Employees Retirement System, other recent newcomers to private equity at the state level include Arizona State Retirement System, which has a 5% allocation to private equity; Public Employees’ Retirement System of Mississippi (5%); South Carolina Retirement System (5%); Vermont Pension Investment Committee (up to 3%); and West Virginia Investment Management Board (5%).

San Diego seeks advisers

The San Diego City Employees’ Retirement System recently entered the private equity arena for the first time, issuing an RFP on June 30 for one or more discretionary advisers to help build a private equity portfolio. The city pension fund has set a 5% target allocation to private equity and is open to all sectors of the asset class.

The pension fund, which seeks to commit about $100 million to $150 million per year, is accepting proposals from a variety of gatekeepers, including managers of funds of funds and separate accounts. It would prefer to hire one adviser, but is open to hiring more than that.

The deadline for responses is Aug. 1. The pension plan hopes to reach a decision by the end of the year, says Corey Buuhoan, investment officer and head of private equity.

Colorado pension fund fills post

Aaron Norton

has been named senior portfolio manager in the Alternative Investment Division of the $40 billion Colorado Public Employees’ Retirement Association. Norton’s goal is to build the private equity portfolio, said Katie Kaufmanis, communications director of the state pension fund.

The Alternative Investments Division manages Colorado PERA’s private equity portfolio, which includes venture capital, leveraged buyout and special situation funds.

In 2007, the CoPERA approved 12 commitments in alternative investments. Five of the commitments were in venture capital, four in leveraged buyouts and three in special situations, totaling $700 million.

Norton replaces David Martus, who left to join Pegasus Capital Advisors, after having spent the past eight years as a private equity portfolio manager with Colorado PERA. He began his new job on July 21.