The Board of the Pennsylvania State Employees’ Retirement System (SERS) met without bloodshed on the Ides of March, revised its 2005 investment returns and approved investments in seven private equity funds for a total of $283 million.
The board’s investment consultant Rocaton Investment Advisors, reported that SERS had a net investment return of 14.5% for 2005. This was an adjustment from an earlier report that put the pension system’s return at 14.9% (Buyouts, Mar. 6, 2006). This is the third straight year of investment return decline for SERS, which earned a 15.1% return in 2004 and a 24.3% return in 2003. The pension system noted in its announcement that it still places in the top 5% of public pension systems with a return more than $1 billion annually, according to Wilshire Associates.
The board authorized seven private equity investments totaling approximately $283 million:
The pension fund approved up to $100 million for Bain Capital’s Bain Capital Fund IX. The Boston-based private equity firm closed on $10 billion for the fund. Bain closed its eighth fund with $3.5 billion in 2004. The firm has more than $27 billion in assets under management and has offices in the United States and Europe.
SERS approved up to $50 million for Centerbridge Capital’s inaugural fund, Centerbridge Capital Partners I. The New York-based firm is raising a combination buyout and distressed debt fund and is reportedly seeking $2.5 billion. The firm was founded last year by former Blackstone Group and Angelo Gordon executives.
The board approved $43 million (€35 million) for Chequers Capital’s Chequers Capital XV. The Paris-based private equity fund, previously known as Charterhouse, invests across a broad spectrum of non-technology companies in Europe.
SERS approved up to $30 million for Francisco Partners’ new fund, Francisco Partners II. The Menlo Park, Calif.-based technology-focused private equity firm has raised more than $837 million for the fund, which has a goal of $2.5 billion, according to Thomson Financial (publisher of Buyouts).
The board approved $25 million for Excelsior Capital Asia’s Excelsior Capital Asia Partners III. The firm has raised more than $109 million for the fund, which has a target of $300 million, according to documents filed with the U.S. Securities and Exchange Commission. Excelsior Capital Asia is based in Hong Kong.
SERS will invest up to $25 million in Worldview Technology Partners fifth fund, Worldview Technology Partners V. The firm is seeking between $250 million and $300 million, according to Thomson Financial. The Palo Alto, Calif.-based venture firm raised $600 million for its fourth fund in 2000.
The board approved $10 million for Sigular Guff & Co.’s Sigular Guff BRIC Opportunities Fund. The New York-based private equity firm has raised more than $210 million for the fund-of-funds, according to Thomson Financial.
The SERS board also approved $100 million for two real estate investment funds.
SERS manages approximately $29 billion and its portfolio includes Apax Partners, Summit Partners, Lexington Partners and HarbourVest Partners. At its last quarterly announcement in December, SERS committed another $230 million to five private equity funds. The pension system is one of the United States’ oldest and was founded in 1923.