PA SERS commits $75 million to growth equity, mezzanine

The Carlyle Group and NewSpring Capital received commitments from the $24bn Pennsylvania retirement system at its 2 May board meeting.

The Pennsylvania State Employees’ Retirement System (PA SERS) reinvested $75 million through its alternative investment portfolio earlier this week, using distributions to fund commitments to The Carlyle Group and NewSpring Capital.

The $24 billion retirement system committed $50 million to Carlyle’s energy mezzanine opportunities fund and $25 million to NewSpring Growth Capital III, according to Pennsylvania documents. 

Carlyle launched the energy mezzanine fund last year. US Securities and Exchange Commission documents indicate the fund had raised at least $227.75 million as of 3 February. An affiliated fund that was filed as a Cayman Islands vehicle, Carlyle Energy Mezzanine Opportunities Fund-A, had raised $85 million, according to documents.  

The firm has already made at least three transactions through its energy mezzanine business. Last year, the firm completed its first investments when it injected $40.5 million in mezzanine capital into two energy exploration and production companies, $20 million to Core Minerals and $20.5 million to Black Raven Energy. The companies will use the mezzanine capital for acquisitions and the development of reserves. 

In January, Carlyle agreed to provide mezzanine financing for the construction of a $225 million Plainfield Renewable Energy biomass project. 

NewSpring Capital is targeting $200 million for its third growth capital fund, according to SEC filings. Through its growth strategy, the firm typically targets growth, expansion, recapitalisations and venture buyouts to businesses located in the US Mid-Atlantic region, according to its website. 

Pennsylvania has a lot of exposure to alternative investments, which comprise more than a quarter of its holdings. As of 31 December, the retirement system had $6.3 billion committed to alternatives, according to documents.