Pennsylvania system maxes alternatives

A commitment to Incline Equity Partners III on Wednesday brought Pennsylvania State Employees’ Retirement System to its annual limit on commitments to alternative investment funds.

The Pennsylvania State Employees’ Retirement System (SERS) approved a $15 million commitment to Incline Equity Partners III on Wednesday, bringing its total allocation to alternatives for the year to $500 million, according to a statement.

Earlier this year, the $24.6 billion retirement system implemented an annual limit of $500 million in commitments to funds that “extend beyond five years”, according to its 2012-2013 strategic investment plan. The limit will improve investment returns, increase vintage year diversification and reduce cash flow volatility, according to the plan. 

That strategic plan also set a 65 percent exposure target on private equity funds within SERS’ $6.6 billion alternatives investment portfolio. The $15 million commitment to Incline brings the retirement system closer to that target, according to a spokesperson. 

The alternatives portfolio – which includes special situations and venture capital – was 63 percent private equity as of 31 December, according to state documents. 

Incline Equity Partners is managed by Incline Management, which spun out of PNC Bank last year. The team – led by Jack Glover, Wali Bacdayan and Justin Bertram – continues to manage a pair of funds raised under the PNC banner. 

In 2007, SERS committed $15 million to PNC Equity Partners II, which is one of the funds managed by Incline. 

The Pittsburgh-based firm targets investments between $10 million and $30 million in size in US and Canadian companies, according to its website.  

Incline Equity Partners III has already completed at least two portfolio transactions, acquiring Double E Company and Dorner Mfg earlier this year.