PA Schools backs debt strategies, Blackstone with March commitments

Pennsylvania Public School Employees’ committed up to 150 million euros ($158.7 million) to an Intermediate Capital Group fund targeting 2.5 billion euros for structured mezzanine investments in European middle market buyouts, as well as refinancings and sponsorless deals.

The firm’s 2011 fund, ICG Europe Fund V, netted a 15 percent internal rate of return and 1.13x multiple as of Sept. 30, according retirement system documents.

The retirement system also committed up to $100 million to Venor Capital Management’s follow-up to its debut special situations fund, a 2008 vehicle that has netted a 1.32x multiple and 25.9 percent IRR as of Dec. 31, according to retirement system documents.

Venor Special Situations Fund II is targeting $300 million with a $500 million hard-cap for debt and equity investments in U.S. and Western European special situations.

The $51.7 billion retirement system’s largest commitment, $300 million, went to the Blackstone Group, targeting $13 billion for its latest flagship real estate fund. The fund was scheduled to hold a $10 billion first close in March, and may grow to as large as $15 billion, according to San Francisco Employees’ Retirement System documents.

On March 16, Blackstone announced it will use its $13.3 billion 2011 vintage real estate fund to acquire the Willis Tower in Chicago, the second tallest office building in the U.S.

In addition to its commitments to private debt and real estate, Pennsylvania Public School Employees’ also committed up to $100 million to Partners Group’s latest secondaries fund, which is targeting 2.5 billion euros for secondary interests in private equity funds.

The retirement system’s investment portfolio generated an 8.83 percent return in 2014, thanks largely to the strong performance of its real estate (17.2 percent) and private markets (10.2 percent) allocations, according to a statement.