The Pennsylvania State Employees’ Retirement System (SERS) held its board meeting at the end of May and approved six more private equity fund allocations totaling $338 million. Half of the fund pledges were follow-on commitments, with the bulk going toward buyout funds.
Among the highlights from the meeting, the SERS board approved up to $128 million (€100 million) to London-based Permira Advisors for Permira IV, a fund that is reported to have a goal of approximately $10.5 billion.
The board also committed up to $75 million for Cerberus Capital Management’s latest fund, Cerberus Institutional Partners Series Four. SERS’s in-state peer, The Pennsylvania Public School Employees Retirement System (PSERS), also committed up to $200 million to the Cerberus fund, which targets mostly distressed opportunities.
SERS is also investing up to $50 million in Chicago-based GTCR Golder Rauner’s newest fund, GTCR Fund IX. The fund is looking to raise up to $3 billion, and is a follow-up to GTCR VIII, which closed in 2003 on $1.85 billion. The board committed another $50 million for New York Life Capital Partners’s new fund, New York Life Capital Partners III. The firm is the private equity unit of New York-based insurance giant New York Life, and has a target of $600 million.
In addition to the buyout fund commitments, SERS will also make smaller investments in venture funds from Quaker BioVentures and NewSpring Capital.
The Keystone State’s employee pension system was founded in 1923 and is one of the oldest in the United States. It has also been one of the private equity world’s most committed public pension investors.
The $29 billion system has reason to be faithful to the asset class. In March, SERS announced that it posted returns that were double the median for U.S. public pension funds. The Harrisburg, Pa.-based LP also said that private equity performed the best among its investments. The pension system earned $3.8 billion last year with an investment return of 14.9 percent. This was a slight drop from 2004’s 15.1% return and a further decline from the 24.3% the system earned in 2003. SERS’s three-year compounded annual return during this span clocked in at 18 percent.
In January, the SERS board also approved $383 million in private equity commitments to seven funds. SERS’s private equity portfolio includes Apax Partners, Summit Partners, Lexington Partners and HarbourVest Partners, among others.