The Pennsylvania State Employees’ Retirement System plans to throttle back its allocation to buyouts and venture capital in favor of more conventional stocks and bonds, but the LP is still making commitments to the asset class.
Spokeswoman Pamela Hile emphasized that the pullback that the agency is planning will be gradual.
“While we are still making commitments to alternatives, we are not making new commitments at the same levels as in the past,” Hile said in an e-mail message today. “As we receive distributions from existing PE/VC funds, much of that money will be available to be reallocated elsewhere over the next five years.”
But by 2015, the agency known by the acronym SERS, which manages a fund of $24.4 billion in assets, plans basically to reverse its allocation to alternatives– buyouts and VC–to 15 percent from its current 24.5 percent target (and 25.1 percent actual allocation) in favor of fixed income, now a targeted 17.5 percent of the portfolio (and actual 15.4), which is slated to rise to 26 percent.
Likewise, the agency cut its allocation to fund-of-hedge-fund absolute returns to a 9 percent target from a current 15.5 percent, while increasing its allocation to stocks to 39 percent of its portfolio from a current 30 percent.
SERS plans a “measured process” that will be “subject to annual review,” Hile wrote.
Even so, the LP made commitments to three funds at a board meeting last week. The LP committed up to $30 million to the British buyout shop BC Partners for its €6 billion ($7.7 billion) BC European Capital IX LP fund, which is reported to offer investor-friendly terms, such as an early-bird discount on fees and reimbursement of all its transaction fees to investors, up from only 80 percent in its previous fund.
SERS also committed up to $20 million to Meritech Capital Partners for its Meritech Capital Partners IV LP fund. The firm, which focuses on late-stage venture capital investments in infotech and medtech companies, has raised more than $2.2 billion in its previous three funds.
And the LP pledged up to $25 million to SFC Energy Management LP for its sophomore fund, SFC Energy Partners II LP. The Denver GP invests in the onshore oil and gas industry in North America.