If the Midwest is America’s heartland, then America’s heart is beating loudly for private equity. The School Employees Retirement System of Ohio (Ohio SERS) plans to increase its allocation to private equity by as much as $300 million in fiscal year 2006, according to the annual investment plan released by the Buckeye State’s pension system.
The plan calls for the pension system to grow its PE portfolio to 5% of its total fund. It plans to commit between $200 million and $300 million to new private equity funds in the 2006 fiscal year.
It will focus on new funds investing in middle market buyouts and venture capital. The pension would also selectively consider special situations, such as distressed debt, energy funds, mezzanine funds and secondary funds.
Ohio SERS is continuing its plan from the 2005 fiscal year. Through this past April, the investment board approved $250 million in commitments to eight new private equity funds. This allocation was split evenly between buyout and venture assets with $125 million going to each asset class. Ohio SERS says it reviewed several “special situation” funds but didn’t find it sensible to invest in them at the time.
The pension system recently announced it returned more than 10% on its investments for the fiscal year ended June 30, an increase of more than $700 million. It marks the fourth year in a row that Ohio SERS beat its benchmark of 10.3%.