SERS Invests $205M in 6 Funds

Continuous commitment to private equity was on the agenda in the Keystone State as the Commonwealth of Pennsylvania State Employees’ Retirement System (SERS) board met last week. The pension fund authorized six private equity investments of $205 million:

* The SERS board authorized investing up to $50 million in New York-based secondary firm Lexington Partners’ latest fund, Lexington Capital Partners VI. The fund is targeted for between $2 billion and $2.5 billion. The firm hopes to have a final close by the end of 2005. Lexington closed its most recent secondary fund, Lexington Partners V, in 2003 with $2 billion. The firm expects to fund to be well above 75% invested by the end of this year. The investment in fund VI is a follow-on commitment for SERS.

* The board agreed to invest up to $50 million in Avenue Special Situations Fund IV, a distressed debut fund managed by New York-based private equity firm Avenue Capital Group. Avenue Special Situations Fund III closed in 2002 with more than $469 million. The investment is a follow-on commitment.

* SERS voted to invest up to $35 million in Healthcare Ventures VIII as a follow-on commitment to Princeton, N.J.-based Healthcare Ventures. The venture firm closed its last fund, Healthcare Ventures VII, in 2002 with about $354 million.

* The board agreed to invest up to $35 million in Meritech Capital Partners III as a follow-on commitment. Previously, Palo Alto, Calif.-based Meritech Capital Partners raised Meritech Capital Partners II, with almost $740 million in 2000.

* SERS make a $25 million follow-on commitment to Alloy Ventures 2005, the latest fund from venture firm Alloy Ventures. The Palo Alto, Calif.-based firm closed its last venture fund, Alloy Ventures 2002, three years ago with $300 million.

* The pension system also agreed to invest $10 million to Brynwood Partners’ fund Brynwood Partners V. The buyout firm has a goal of $258 million and held a first close in September with $152 million.