Pennsylvania Public School Employees assigns $950m to private markets

The $66 billion Pennsylvania Public School Employees’ Retirement System committed $950 million across a number of private equity and private markets strategies at its December 6 board meeting. Management firms winning mandates were Carlyle Aviation, Portfolio Advisors, Incline Management, Apax Partners, Insight Venture Management and Clearlake. All the mandates were for $150 million, with the exception of Clearlake, which won a $200 million mandate. Clearlake is raising its Clearlake Capital Partners VI to continue investing in North American middle-market companies that are undergoing complex financial, operational or structural change. Pennsylvania School Employees previously committed $57.5 million to Clearlake Capital Partners IV in 2015, $100 million to Clearlake Capital Partners V in 2017 and $100 million to Clearlake Opportunities Partners II in 2019. Hamilton Lane advised on the investment, according to meeting materials. Carlyle Aviation’s SASOF V LP was selected upon recommendation of pension fund staff and consultant Aksia. Carlyle Aviation was created out of private equity firm Carlyle Group of Apollo Aviation in the fourth quarter of 2018. The new offering specializes in aircraft leasing and follows other successful previous offerings in which the Pennsylvania pension previously invested. The latest investment is trustees fourth investment with the group in a fund that will begin putting money to work in April 2020. Portfolio Advisors Secondary Fund IV, meanwhile, invests in buyout, growth, venture, and special situations funds (such as mezzanine funds, distressed debt funds, energy funds, and other alternative investments), private credit funds, real estate funds, secondary and co-investment opportunities, and funds with a geographic focus, such as U.S., Europe and the Pan-Asia region. The fund offers additional secondaries exposure to Pennsylvania, and is seeking equity commitments of up to $1.25 billion, with a hard cap of $2.25 billion. Within the pension fund’s private market portfolio, Incline was selected to manage niched private equity market investments in the firm’s Incline Equity Partners V. The firm focuses on core business sectors such as business services and specialized light manufacturing and this fund will seek out control-oriented equity investments. Hamilton Lane assisted in selecting Incline and also in choosing Insight and Apax X USD, which is focused on technology and telecommunications, services, healthcare and consumer sectors. This is the pension fund’s third commitment to an Apax fund since 2007. Most recently, officials allocated $100 million to the Apax Digital Fund in 2017. That fund had a net internal rate of return of 26% as of June 30, 2019. As for Insight Venture Management, Pennsylvania trustees have selected the Insight Partners XI that is targeting $7.25 billion in investor commitments. According to retirement fund documents, the Insight fund will make private investments in growth stage as well as more mature software, software-enabled services and Internet companies. The pension fund’s non-traditional investment portfolio is vast and accounts for a large portion or roughly 36% of overall assets. Private equity/venture capital commitments total $7 billion; real assets/infrastructure, $5.1 billion; private credit/special situations, $6.3 billion and absolute return, $6 billion.

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