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PA SERS commits $75 mln to Hahn & Co, eyes co-investments

  • Seeks co-investment opportunities in private equity
  • Targets annual pacing of $650 mln new commitments
  • PE has 16 pct long-term target allocation

Pennsylvania State Employees’ Retirement System committed $50 million to Hahn & Co’s Fund III and $25 million to Hahn’s Fund III-S LP, which will co-invest alongside Fund III.

In a bid to reduce management fees, the pension fund will research co-investment opportunities, the 2018-2019 Investment Plan, approved by the Pennsylvania SERS board on April 25, shows.

Moreover, the pension hopes to negotiate lower management fees by building fewer long-term strategic partnerships with best-in-class funds.

The system is targeting an annual pacing of $650 million in new commitments to meet the long-term target allocation of 16 percent for the asset class, pension documents show.

Pennsylvania SERS will commit $75 million or more to PE funds, the documents show. The system will consider VC and emerging markets on a case-by-case basis for investments under $75 million.

One such investment is Hahn & Co. Earlier, PA SERS had invested in Hahn through its relationship with fund-of-funds Asia Alternatives.

 Hahn’s performance in its previous two funds made the pension fund comfortable to invest directly in its third fund, said Bryan Lewis, CIO at Pennsylvania SERS.

Hahn & Co, a South Korea-focused mid-market PE firm, was set up by Scott Sang-Woon Hahn in 2010. Hahn previously had spent 15 years at Morgan Stanley and built the firm’s practice in South Korea in 2000.

Hahn’s Fund I closed at $750 million in 2011 and Fund II closed at $1.9 billion in 2014. It has $3 billion assets under management, including Ssangyong Cement, Korea’s largest cement maker.

The PA SERS board also extended its contract with Stepstone Group, which provides back-office support for the two-member private equity team at the pension fund.