Pennsylvania State Employees’ names executive director as returns climb

  • Terrill Sanchez joins the fund
  • Penn. SERS more than doubled its investment returns in 2017
  • Private equity returns 12.8 pct

Terrill Sanchez will join Pennsylvania State Employees’ Retirement System as executive director, succeeding David Durbin, who retired earlier this year.

The state employees’ pension has a $4.1 billion private equity portfolio, which accounted for 15.7 percent of its total fund in 2016. It has been one of the more prolific LPs in the market in recent years and has a PE target allocation of 16 percent.

The system’s PE portfolio returned 12.8 percent in 2017, up from 6.8 percent at the end of 2016.

Sanchez will lead the investment portfolio as the state employees’ pension plans to increase its PE pacing of new commitments to $750 million from $500 million.

It also intends to make PE commitments of $100 million or greater to reduce the number of funds and improve the system’s leverage to negotiate lower management fees.

The state employees’ system’s PE portfolio includes buyouts, special situations and venture capital; it has 147 investment managers and 351 portfolios.

U.S. private equity has a 35 percent allocation in the PA system’s PE portfolio; 70 percent of the PE investments are in the U.S.

Financials lead sector investments at nearly 27 percent, followed by IT, consumer discretionary and healthcare.

This year the system re-upped $75 million to LLR Equity Partners and intends to make a fresh re-up to Hahn & Co, documents show. Some of its biggest relationships include Apollo Global, Blackstone, Carlyle, Hellman & Friedman, Bain Capital, Vestar Capital Partners, Kelso & Co and Summit Partners.

The Pennsylvania system also agreed to support the use of the Institutional Limited Partners Association fee-disclosure template.

It joined, among others, Municipal Employees’ Retirement System of Michigan and Virginia Retirement System, which have committed to transparency in reporting fees, expenses and carried interest in their PE portfolios.

Most recently Sanchez was deputy executive director with the $56 billion Pennsylvania Public School Employees’ Retirement System. Sanchez spent more than 26 years with the public school employees’ system in various capacities.

No decision has been made about her successor yet, a spokesperson for the Pennsylvania public school system told Buyouts.

Meanwhile, the $27 billion Pennsylvania state employees’ pension system earned 15.1 percent on its investments in 2017, compared with 6.5 percent in 2016.

Action Item: Read more on the system’s investments here:

Photo of Terrill Sanchez courtesy Pennsylvania state employees’ pension system