USS cranks up co-invest programme with double hire(3)

The UK's second largest pension fund the Universities Superannuation Scheme is demonstrating its appetite for alternatives with the appointment of two private equity specialists to lead its co-investment programme alongside its fund investments.

Universities Superannuation Scheme, the second largest UK pension fund with £30 billion under management, has launched a co-investment programme with a double hire.

It has expanded its alternative assets team with the appointments of Fraser Booth and Geoffrey Geiger.

Booth has joined from Railpen Investments as portfolio manager focusing on fund selection within private equity and infrastructure.

He said: “My primary responsibility is to build a portfolio of private equity and infrastructure assets. As and when we develop opportunities from general partners and elsewhere we will invest.”

Geiger has come from Klesch & Company, a private equity firm in London. Geiger will work alongside Booth as a due diligence analyst with a focus on managing co-investment transactions.

The pair will co-invest between £25 million and £75 million per deal as they build the portfolio from scratch. Booth said this would tend to the top end of the scale as the allocation to private equity increased in scale and the value of the fund increased. The £30-billion fund is also generating £1 billion in cash flow per annum, which will be reinvested.

USS has committed to a target allocation of 5 percent to alternatives by March 2008, rising to 20 percent over the medium term. Private equity will account for up to 50 percent of that allocation. Since launching the alternative asset programme in 2006, USS has made over £1.5 billion in commitments to private equity and infrastructure funds

Both Booth and Geiger have joined the private equity and infrastructure team and will report to Mike Powell, head of alternative assets.

Peter Moon, chief investment officer of the scheme said: “This is just the start of our on-going commitment to alternative assets.” Booth said as a long-term investor, the scheme has to look through the cycles and invest across them. But he said he expected a slow down in the drawing of committed capital across the scheme’s portfolio as the credit crunch bites.