PA SERS commits $30m to Berkshire

The $24bn pension recently cut its long-term allocation target to private equity from 24.5% to 15% as it follows a strategy of only committing capital to existing managers.

The Pennsylvania State Employees’ Retirement System has committed $30 million to Berkshire Partners’ eighth fund, the target amount of which could not be determined at press time.

Berkshire’s seventh fund closed on $3.1 billion in 2006. The firm invests in consumer products, retailing and related services, business services, transportation, energy, industrial manufacturing and communications.

Once an active private equity investor, PA SERS recently cut its long-term allocation target to private equity from 24.5 percent to 15 percent. The pension has implemented a strategy of only committing capital to existing managers, and is working to boost its exposure to fixed income investments.

PA SERS is “gradually” increasing its exposure to fixed income “to meet the liquidity needs arising from a projected increase in benefit payouts as the system matures”, a spokesperson told PEO in a prior interview. “This is a measured process that will be done through cash flows and distributions. Because we are not making new commitments to private equity and venture capital at the same levels as in the past, 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.”

Last month, Pennsylvania committed  $75 million in re-ups to BC Partners, Meritech Capital Partners and SFC Energy Partners.

The pension’s actual allocation stands at roughly 25 percent. PA SERS reported a 0.5 percent return for private equity as of 30 June, 2010.