Iowa pension sets $800m for PE in 2017

The Iowa Public Employees’ Retirement System is keeping its $800m annual commitment level to private equity, which it raised from $700m in 2015.

The Iowa Public Employees’ Retirement System (IPERS), one of the US public pension plans with the best performing private equity programme, is planning to commit $800 million to private equity for the 2017 calendar year, according to the pension’s summary of its 1 December board meeting.

According to the document, Des Moines-based IPERS will remain consistent with the 2016 year plans for its annual private equity commitments by allocating $800 million to the asset class for 2017, at the discretion of its private equity portfolio manager Pathway Capital Management in California.

The $800 million annual commitment level began in the 2016 calendar year, which was up from $700 million in 2015, as reported by Private Equity International. In 2014, however, IPERS allocated $800 million, and $650 million in 2013.

The 1 December summary also said all asset classes were within the target allocation ranges as of 18 November, when IPERS’ fund had a market value of $28.54 billion.

According to PEI data, IPERS allocated 11.5 percent, or $3.28 billion, to private equity, below its 13 percent target allocation. As of 30 September, IPERS’ private equity portfolio returned 3.93 percent for the third quarter, according to the pension’s website.

IPERS’ private markets investment policy from 1 October indicated IPERS’ private equity commitments must not exceed 20 percent of the entire final closing value of a fund, and should not be bigger than $80 million per commitment. For co-investments, commitments have a $15 million limit and 15 percent of the overall private equity portfolio, the document said.

Pathway, which has a 30-year relationship with IPERS, selects all of the private equity fund managers IPERS commits capital to, with a standard structure of 2 percent management fee and 20 percent carried interest, according to 2 February meeting minutes of the Iowa state legislature.

In the past, IPERS has committed capital to funds managed by Connecticut-based, financial services-focused Stone Point Capital, New York-based mid-market firm Odyssey Investment Partners and Pathway, PEI data showed. Its typical commitment size was around $70 million per fund.

IPERS mainly focuses on private equity investments in North America and Western Europe, but also considers the Middle East and Latin America, according to PEI data.

IPERS was one of the best-performing US public pension funds in private equity in this year’s ranking by the American Investment Council. It returned 14.95 percent for annualised 10-year performance, coming in third, after Teacher Retirement System of Texas and San Francisco Employees’ Retirement System.

An IPERS spokeswoman was not available to respond to further inquiries regarding the 2016 year commitments. Pathway was not available to comment.