MainePERS Plans to Double Down on Private Equity

Pension: Maine Public Employees Retirement System

Assets Managed: $11 Billion

PE Assets Managed: $120 Million

PE Allocation (Target): 1.1% (10%)

Chief Investment Officer: Andrew Sawyer

“We plan on moving to this allocation with all deliberate speed, but no faster,” said Sawyer in an email. He added that MainePERS planned build up the increased exposures to private equity, infrastructure and real estate over three to five years.

Under the new plan, the target allocation to private equity will rise to 10 percent from 5 percent. The system’s current private equity allocation is just 1.1 percent, or $120 million, which is much smaller than the system’s current 5 percent target because the plan’s private equity portfolio is so young that many of its commitments have not yet been drawn down.

The target for infrastructure and hard assets such as commodities are also set to increase. Infrastructure, which currently amounts to 2.2 percent of the portfolio, will see its target increase to 10 percent from 5 percent, while hard assets like commodities and forest land will go from zero to 5 percent under the plan.

Most of the new money being steered to alternative investments will come from public equities, which now command 55 percent of the system’s overall assets.

Maine has been very active on the commitment trail during 2012, having committed $330 million across a variety of strategies. The pension committed $150 million to two infrastructure funds: $75 million to Meridiam Infrastructure North America Fund II LP which closed with $1 billion in pledges, and $75 million to Australian-based Industry Funds Management Global Infrastructure Fund LP

The pension also committed $30 million each to two funds from Kohlberg Kravis Roberts & Co.: the KKR Special Situations Fund LP and the flagship KKR North American XI Fund LP.

Other funds that Maine has committed to during 2012 include $30 million to Water Street Healthcare Partners III LP, a healthcare buyout specialist, $30 million for ABRY Senior Equity IV LP, a debt fund, $30 million to Affinity Asia Pacific Fund IV LP, an Asian buyout vehicle, and $30 million to EnCap Energy Capital Fund IX LP, an energy-focused fund.