Penn SERS focuses on co-investments amid $500m of new commitments

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The Pennsylvania State Employees’ Retirement System has agreed to commit $500m to a number of alternative assets funds as looks for attractive returns at lower fees.

Within its private equity allocation, the retirement system committed $50m Altaris Health Partners V, according to documents from its latest board meeting.

Altaris is looking to collect $2.5bn for Fund V, with a $3bn hard cap. The firm recently received a $100m commitment for its fifth fund from the New Jersey Pension Fund.

HarbourVest PA Co-investment Fund and Neuberger Berman’s NB PA Co-investment Fund secured a $200m commitment each from the board.

Penn SERS’ also agreed to invest $50m in Oak Street Real Estate Capital Fund V, which is seeking $2bn of capital, according to an SEC from late last year.

The LP previously committed $100m to the Oak Street’s predecessor vehicle two years ago.

The pension fund achieved a 9.6 per cent return on its private equity investments in 2019.

Penn SERS’ real estate portfolio also bagged a 11 per cent return for last year, while the total fund’s annual return rate for 2019 stood at 18.8 per cent.

“Co-investment opportunities provide us with the potential to generate attractive returns at lower fees by investing alongside private equity managers,” said SERS executive director Terrill J Sanchez.

“This arrangement allows us to greatly expand the scope of opportunities available to us to partner with external managers on a low-fee, low-carry basis. This strategy also aligns with the recommendations that were part of the final report issued by the pension review commission in December 2018.”

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