The $51 billion Pennsylvania Public School Employees' Retirement System has launched a new private markets and real estate programme to make co-investments and secondary fund purchases from existing managers.
The pension will invest up to $100 million in co-investment opportunities and secondary fund purchases in funds where PSERS is already a limited partner, which could include vehicles managed by New Mountain Partners, Credit Suisse and Oaktree Capital Management. Investments will range in size from $5 million to $15 million.
The pension previously pursued co-investment and secondary opportunities through commitments in vehicles managed by Cross Atlantic Capital Partners’ Co-Investment Fund I and Coller International Partners VI.
“One of the primary reasons to have an in-house program is because of the cost savings,” a spokesperson for PSERS told Private Equity International. “There is potential for better returns with no fee and no carry co-investments.”
Significantly, PSERS also approved up to $300 million to two managers. The pension is making a re-up investment of up to $100 million in Denham Commodity Partners Fund VI and an investment of up to $200 million in Platinum Equity Capital Partners III, a new relationship.
The commitments are the first major pledges to private equity managers the pension system has made in several years, since pulled back from private equity amid the financial crisis and canceling several recommended commitments to managers in 2009.
In 2010, PSERS hiked its allocation to private equity to 21 percent from 18 percent to make room for $6 billion of unfunded commitments in the portfolio. The pension also transferred its 1.5 percent public real estate securities allocation to its private real estate portfolio, increasing it to 10.5 percent.