LP news, week of Aug. 25, 2008

Iowa PERS stands on $500M to commit in 2008

The Iowa Public Employees’ Retirement System has upwards of $500 million left to commit to funds this year. Unlike many other pension funds, Iowa’s board does not approve individual commitment amounts. Instead, advisory firm Pathway Capital Management has full discretion to make commitments up to a maximum annual dollar amount approved each year by the board.

“The maximum amount that can be committed in 2008 is $800 million,” says Karl Koch, CIO of the state pension fund. Koch stresses that Pathway is not required to commit $800 million in 2008. How much actually gets committed will depend on the quality of deals and Pathway’s discretion, he says.

Koch estimates that about $300 million has been committed so far this year, which includes recent commitments, totaling $180 million, to a pan-European buyout fund, two North American buyout vehicles and a distressed debt fund,

In other news, Iowa PERS in June issued a request for proposal as it seeks a new general consultant. Its contract with Wilshire Associates expires in September. —Nancy Gordon

Philly goes for Levine Leichtman buyout fund

The $5.2 billion City of Philadelphia Board of Pensions and Retirement last month approved a $25 million commitment to the fourth lower-middle market buyout fund of Levine Leichtman Capital Partners, according to Christopher McDonough, chief investment officer.

The city pension fund’s target range for alternative investments is 6% to 11 percent. Commitments from the city fund tend to run between $15 million and $30 million.

Levine Leichtman Capital Partners IV is a $1 billion-target structured equity fund, with a hard cap of $1.5 billion. In June, it reached a first close of $425 million.

Levine Leichtman has also raised commitments from the New Mexico State Investment Council, which agreed in April to invest $35 million. The New York State Common Retirement Fund made a $50 million commitment in May. In June, New Mexico Educational Retirement Board committed $50 million. —Nancy Gordon

Alaska backs infrastructure funds

Infrastructure funds have found a supporter from The Last Frontier state, as the board of the $39 billion Alaska Permanent Fund Corp. late last month approved pledges to the second funds of GS Infrastructure Partners and Alinda Capital Partners.

The Permanent Fund committed $500 million to Goldman Sachs Infrastructure Partners II fund and $250 million to Alinda Infrastructure Fund II. The state pension fund, whose target allocation to private equity is 6%, has now committed $1.6 billion to the asset class. With $700 million of that drawn down, the investor remains well beneath its $2.3 billion goal.

In other news, Richard Shafer, CIO of the Permanent Fund, plans to retire this month at the end of August. As of July 3, about 15 applications had been received for the position. The salary range is $200,000 to $300,000, although the board has agreed to be flexible to avoid turning off prospective candidates, according to recent board meeting minutes. —Nancy Gordon