Pa. Pledges Over $60M To Several Strategies

The Pennsylvania State Employees’ Retirement System recently pledged a total of $62 million to four private equity firms for distressed, buyout and Asian investments, even though the limited partner’s actual allocation to private equity is above its target allocation to the asset class.

The limited partner pledged up to $12.5 million to OCM Opportunities Fund VIII LP and up to $12.5 million to OCM Opportunities Fund VIIIb LP for the securities of distressed companies; up to $20 million to Avenue Special Situations VI LP for non-controlling investments in troubled companies; up to $10 million to JMI Equity VII LP for tech-focused buyout and growth equity investing; and up to $7 million to Asia Alternatives Capital Partners Korea Buyout Investors LP, as a co-investment in Hahn & Company Korea Ltd.

In December 2009, the LP adopted a long-term target allocation of 12 percent to alternative investments. Within that, 9.5 percent is the long-term target for private equity. The pension’s current exposure to private equity is 20 percent, said a spokesperson.

As far as upcoming pledges to the asset class, whatever commitments are made will be to maintain existing relationships. The LP wants to maintain exposure to private equity strategies that “play to commercial and consumer demands for innovation, and are appropriate for uncertain and, perhaps, turbulent economic conditions,” said the spokesperson, who added that manager selection is at least as important as backing the right strategy, so the pension will emphasize fund sponsors most likely to optimize returns.