Pennsylvania bets on credit and distressed

The $25.7bn state workers' system committed $100m to H.I.G. Europe and Los Angeles-based Platinum Equity.

The Pennsylvania State Employees’ Retirement System approved $100 million in commitments Wednesday— $50 million each to H.I.G. Europe Capital Partners II and Platinum Equity Partners Fund III.

H.I.G. Europe Capital Partners is seeking €750 million for its second vehicle that will target lower mid-market growth opportunities primarily in Europe, according to a filing with the US Securities and Exchange Commission. The system’s $50 million commitment matches its re-up to H.I.G. Bayside Loan Fund III, which it made in March for the firm’s credit affiliate Bayside Capital.
H.I.G. Europe’s first fund, a July 2007 vintage, reached its hard-cap of €600 million for its first European investments, including Diam Europe. H.I.G. sold the French manufacturer of high-end display fixtures last year.

Platinum Equity Partners is targeting $3.75 billion for Fund III.  At the end of last year the fund received a $100 million commitment from the New York City Employees’ Retirement System. The Florida State Board of Administration also committed $200 million to the fund. The Los Angeles-based firm’s previous two funds endow Platinum with $3.45 billion in commitments.
Since 1995, Platinum has made more than 145 acquisitions including security systems integrator, CheckView earlier this year and BWAY, rigid container manufacturer, last year. In May, Platinum sold Contego Healthcare business for cash consideration of about £160 million to FIL International Limited. Currently Platinum has 34 active investments.
Pennsylvania State Employees’ board also reported positive performance from all of its asset classes during the first quarter. Global equity led with 7.4 percent returns. The entire fund saw a 3.6 percent return during the first quarter. Private equity returned 2.3 percent, though its returns lag by a quarter, the system said in a statement.

The system has been following a strategy of significantly cutting down its exposure to private equity since it became heavily overweighted to the asset class in the global financial crisis. According to its 2012-2013 Strategic Investment Plan, the system wants to get its exposure from 30 percent to 16 percent in the next 10 years.