Public Pension Capital seeks increased allocations for evergreen fund

  • Fund has raised $640 mln since 2014, seeking more from pensions
  • Founded by ex-KKR partners Perry Golkin and Michael Tokarz
  • LP-friendly features include Board of Investors, 10 pct GP profit share

Public Pension Capital is looking for investors to up their allocations to its evergreen-structured fund, a document from the Minnesota State Board of Investment says.

Based in New York, PPC is led by former KKR partners Perry Golkin and Mike Tokarz, who founded the firm in 2014. Since then the fund has raised $640 million, and is said to be seeking further commitments from public pension funds and other long-term investors.

The fund invests in “conservatively priced,” stable, small and middle-market companies in the U.S. and Canada, according to pension documents. The firm’s website lists business and industrial services, financial services, healthcare and specialty chemicals as industries of interest.

The fund has no fixed term, though PPC will try to exit investments within 10 years, subject to three one-year extensions. Keeping the fund open-ended allows the GP to focus on investment activities, rather than fundraising, documents said. There is also a Board of Investors tasked with approving the budget, management fees and expenses, the size of the fund and its LP base.

Management fees have been 1.5 percent for 2015, 1.49 percent for 2016 and 1.39 percent for 2017. The GP’s profit participation is capped at 10 percent.

PPC is required to invest an amount of its own capital equal to 5 percent of aggregate LP commitments up to the first $1 billion. In another investor-friendly feature, LPs can reduce their undrawn and unreserved commitments each year to deal with liquidity concerns or strategy issues.

The fund has a net IRR of 10.45 percent and a net MOIC of 1.1x as of September 30, pension documents said, citing State Street.

Golkin, the firm’s CEO, and Tokarz are each key persons. A key-person event would be triggered by the departure of any two of the three senior investment professionals: Jeffrey Krauss (healthcare), James Fisher (financial institutions), and Thomas Uger (business services).

Action Item: Check out PPC’s Form ADV here.

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