Firms & Funds

Mississippi earmarks $950 mln for PE

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Farm worker Leon Strickland sits outside his home in Tunica, Mississippi October 24, 2015. Strickland picked cotton by hand as a child and has worked for the same family of farmers since 1965. REUTERS/Brian Snyder
  • Pathway to commit account to new funds over four years
  • $24.9 bln pension holds 6.3 pct of assets in PE
  • Commitment should bring Mississippi to 8 pct target by 2020

Public Employees’ Retirement System of Mississippi’s board voted to commit $950 million to a private equity separate account managed by Pathway Capital Management in April, according to documents Buyouts obtained through a public records request.

Pathway would allocate Mississippi’s committed capital to new funds over a four-year period. The separate account’s underlying general partners would likely fully deploy those commitments within five to eight years, according to an unofficial copy of the minutes obtained by Buyouts.

The $950 million commitment to Pathway should bring Mississippi up to its 8 percent target for the asset class by 2020, according to pension documents. The $24.9 billion retirement system held about 6.3 percent of its assets in private equity as of Dec. 31.

Mississippi launched its private equity program in 2008 with commitments to Pathway and Credit Suisse’s private funds group, which was later acquired by Grosvenor Capital Management. The retirement system increased its target allocation to 8 percent in 2014.

Mississippi committed $750 million to its first Pathway account, which yielded the retirement system exposure to 42 underlying partnership investments. The retirement system committed another $700 million to Pathway in 2013.

Mississippi also has $1.45 billion of commitments allocated across a pair of Grosvenor separate accounts. Its most recent commitment, a $700 million allocation to a 2014 vintage fund, was 42.5 percent invested through the end of the first quarter, according to pension documents.

As of June 30, roughly 60 percent of Mississippi’s $1.4 billion private equity portfolio was invested in buyout funds, according to its most recent annual report. Slightly more than a quarter of its portfolio was invested in special situations vehicles and 14 percent was invested in venture capital.

Mississippi’s private equity portfolio returned 14.9 percent during the fiscal year ending June 30, according to the annual report. It generated a five-year annualized return of 11.3 percent.

Action Item: To see Mississippi’s most recent annual report, visit http://1.usa.gov/1rGIVxa