Georgia opens up to alternatives

Governor Nathan Deal has approved legislation that will allow the state’s $13bn Employees’ Retirement System to invest up to 5% of its assets in alternatives.

Private equity: the state of Georgia will see you now.

Governor Nathan Deal signed legislation last week that enables some of the state’s largest public pension funds to invest in private equity and other alternative assets. Effective 1 July, the regulations allow the $13 billion Georgia Employees’ Retirement System to invest up to 5 percent of its assets in alternatives.

However, the retirement system’s emergence as a limited partner will likely be limited, at least in the short term. The law restricts how the Employees’ Retirement System can launch its alternatives strategy. The pension system cannot commit more than 1 percent of its assets to alternatives annually. Commitments are also held to no more than 20 percent of any particular fund, and vehicles must receive investments from at least four other LPs before ERS can commit. 

The $54 billion Teachers Retirement System of Georgia was excluded from the law, and thus will be unable to invest in alternatives, for undisclosed reasons. Georgia officials were unavailable at press time because of a state holiday. 

Georgia is the last of the fifty states to allow its pensions to invest in alternatives, according to materials provided by the legislation’s sponsors. Earlier this year, the bill passed the state’s House of Representatives by a vote of 104 to 53 and the Senate by a vote of 50 to 4.