Penn. SERS OKs $320M for PE

The board of directors of the Pennsylvania State Employees’ Retirement System (SERS) met last week and received good news in an update on its returns and approved another $320 million for alternative investments.

SERS posted investment returns of 3.9% for the first half of the year and a 13.5% return on investments of the previous 12 months. The returns place the $27 billion pension system in the top 10% of public pensions in the United States, says SERS Chairman Nicholas Maiale.

Chief Investment Officer Peter Gilbert credits the pension system’s investment diversity for the high returns.


The board also approved investments in six private equity funds:

* SERS approved investing up to $150 million in Blackstone Group’s Blackstone Capital Partners V. Blackstone, a New York-based buyout firm, raised a record $12.5 billion for the fund. The firm closed Blackstone Partners IV in 2003 with approximately $6.5 billion. The SERS investment is a follow-on commitment.

* The board approved a $40 million follow-on commitment for Apollo Investment Fund VI, a buyout fund being raised by Apollo Management. The Purchase, N.Y.-based firm raised Fund V in 2001 with $3.8 billion.

* The board pledged up to $40 million for Oaktree Capital Management’s OCM Opportunities Fund VI as a follow-on commitment. The fund is a distressed debt fund. Its predecessor, OCM Opportunities Fund V, closed last year with about $1.2 billion.

* SERS will invest up to $50 million in Vestar Capital Partners’ Vestar Capital Partners V as a follow-on commitment. Vestar is seeking $3.5 billion for the buyout fund. The firm’s previous dedicated buyout fund, Vestar Capital Partners IV, closed in 1999 with about $2.5 billion.

* The board approved up to $20 million to invest in Eureka II, a growth capital fund managed by Eureka Growth Capital. Eureka I closed in 1999 with $63 million.

* The board approved $20 million for investment in Lime Rock Resources, a fund managed by Lime Rock Partners. SERS is an investor in the firm’s last fund, Lime Rock Partners III, which closed last year with $425 million.

SERS manages about $27 billion and its portfolio includes Apax Partners, New Enterprise Associates, Summit Partners, Lexington Partners, Morgenthaler Ventures and HarbourVest Partners. The pension system is one of the United States’ oldest and was founded in 1923.