Pennsylvania SERS commits $50m each to H.I.G., KPS

KPS Capital Partners’ recent success on the fundraising trail continues with a $50m commitment from the $25.3bn Pennsylvania State Employees’ Retirement System.

The Pennsylvania State Employees’ Retirement System’s board committed $100 million to private equity and credit at its meeting Wednesday, according to a statement.  

The $25.3 billion retirement system committed up to $50 million to KPS Special Situations Partners IV. KPS has already sealed several high profile commitments for its $3 billion fourth fund. Recently, the New Mexico State Investment Council and the Teachers’ Retirement System of Louisiana committed $75 million each to the vehicle. 

LP enthusiasm for KPS’ latest vehicle is likely being spurred by the firm’s performance as of late. Special Situations Fund III, a $1.2 billion 2007 vintage, was generating a 19.3 percent net internal rate of return and a 1.46x investment multiple as of 30 June, according to California Public Employees’ Retirement System documents. 

Special Situations IV will make control investments in basic manufacturing, transportation and service businesses. The firm’s strategy typically includes corporate divestitures and carve-outs, operational turnarounds, financial restructurings, businesses operating in bankruptcies and companies in out-of-favour industries.

Pennsylvania also re-upped to $50 million to H.I.G. Bayside Loan Fund III. H.I.G. Capital’s credit affiliate Bayside Capital is targeting $1 billion for the vehicle, according to US Securities and Exchange Commission documents.

The firm’s previous Bayside Loan Fund, a $1.1 billion 2010 vintage, was generating a 1.2x total value multiple as of 30 September, according to Maine Public Employees Retirement System documents. 

“These commitments increase SERS’ exposure to special situations and are SERS’ first 2013 investments toward its $500 million annual pacing target for alternative investments, as outlined in the 2012-13 Strategic Investment Plan,” according to a statement from the retirement system.