New to PE, Arkansas expects distributions by end of 2024

The system’s early focus on secondaries should bring back cash quickly.

Arkansas Public Employees Retirement System expects to receive the first distributions from its new private equity program by the end of the year.

Most state public pension plans have allocated to private equity for several years. Arkansas only decided to invest in private equity last year and is in the earliest stages of developing its private equity program.

Arkansas and consultant Stephens Capital Management discussed the system’s private equity program at its February 21 board meeting. Buyouts watched a broadcast of the meeting.

The $10.9 billion system committed $400 million to HarbourVest’s Dover Street XI secondaries fund and $325 million to a customized fund of one developed by Neuberger Berman.

Distributions should come after Dover XI’s final close, which is expected in the second half of this year, said Stephens Capital executive vice president Larry Middleton. According to the presentation, Arkansas has so far contributed $68 million to Dover XI.

“This is the single best way to get exposure to private equity and get cashflow back to meet your obligations,” Middleton said.

These early distributions will also help build the Neuberger Berman fund of one, according to Stephens Capital senior vice president Bo Brister.

Arkansas has yet to contribute to its fund of one, according to the presentation. The fund has underlying commitments of $75 million to secondaries investments, $50 million to a fund of funds and $15 million to primary funds, the presentation said.

“The fund of one allows for flexibility for ongoing commitments and for you to change tactics. It’s the platform of the future for this pension,” Brister said.

Stephens and system deputy director of investments and finance Carlos Borromeo have had 117 communications with its two managers in the fourth quarter alone, Brister said.