PA SERS backs Thoma Bravo, continues its search for good GPs

  • Assets under Management: $29.1 billion
  • PE allocation: 13.6 pct
  • Key personnel: Bryan Lewis, CIO; David Felix, director Alternative Investments
  • Why this is important: PA pension introduces itself to Thoma Bravo for first time

Pennsylvania State Employees’ Retirement System committed $75 million to Thoma Bravo’s 13th fund, which is expected to raise $9 billion.

This is PA SERS’s first commitment to Thoma Bravo.

PA SERS also intends to make a new commitment to TCV’s 10th fund, pension documents said. The Palo Alto, California, firm invests in public and private tech companies, focusing on internet, services, infrastructure and software. Its previous fund closed at $2.5 billion.

In addition, PA SERS will seek to re-up to Hellman & Friedman for its ninth fund, and Audax Group’s sixth fund later in the year, pension documents said.

The $29.1 billion PA SERS has a $4 billion private equity portfolio, which accounted for 13.6 percent of its total fund in 2017. The pension fund has an annual pacing target of up to $650 million and an allocation target of 16 percent for PE.

PA SERS is focused on trimming its GP relationships to a core group of managers and committing between $75 million and $100 million, pension documents said.

Most of PA SERS’s commitments are expected to be re-ups, but the pension fund will seek managers and funds with good performance, Bryan Lewis, CIO of PA SERS, told Buyout sister publication Buyouts in a previous article.

Buyouts account for more than 60 percent of PA SERS’s PE portfolio, followed by special situations and venture capital funds. The U.S. represents more than 70 percent of investments. Financials were the largest sector, followed by IT, consumer and healthcare, pension documents said.

Thoma Bravo has more than $20 billion under management, and its focus is in software and technology-enabled services. Its funds include the Discover funds for middle-market and larger flagship funds.

Thoma invests $50 million to $300 million in mid-market opportunities and $400 million to more than $1 billion in larger opportunities.

Thoma closed the second Discover fund in April 2018 on $2.4 billion.

The middle-market funds have enabled Thoma Bravo to seek out endowments and foundations that commit smaller amounts, $10 million to $25 million, an institutional source who has invested in the private equity firm said.

Earlier, Massachusetts Pension Reserves Investment Management Board re-upped $150 million to the 13th Thoma Bravo fund. In addition it committed to its second Discover fund, and previously invested in 10 Thoma Bravo funds.

Thoma Bravo did not respond to requests for comment.

Action Item: Read more on PA SERS’s investments: