Iowa PERS to commit up to $1.3bn to private debt in 2022

The allocation reflects the pension plan's broader alternatives strategy.

Iowa Public Employees’ Retirement System is going all-in on private markets in the upcoming calendar year.

According to recent investment board meeting materials for the pension system located in Des Moines, Iowa, PE commitments for 2022 will include primary fund investments, secondaries and equity co-investments. Private credit commitments will include investments across IPERS’ three sub-portfolios: opportunistic private credit, direct lending and real assets credit.

For calendar year 2022, the planned commitments will be up to $100 million in secondaries and up to $150 million in co-investments.

Private markets make up 28 percent of the total fund and within the private markets’ portfolio, private equity accounts for 18.9 percent – well over the intended allocation of 13 percent.

“Private equity results have been exceptional over the past year, and the market value of the private equity portfolio has increased much faster than the increase in the IPERS Fund market value,” according to Pat Reinhardt, senior investment officer, alternatives at Iowa PERS. “This exceptional growth explains a significant portion of the current overweight versus target.”

According to presentation documents, the pacing plan calls for projected exposure to PE to slowly decline over the next 12 years. If things go as planned, it will dip to 16 percent in 2022, 14.5 percent in 2023, 12.4 percent in 2026 and will reach a floor of 10.2 percent in 2033.

“Pathway’s proprietary multi-year commitment model makes various assumptions around distribution pace, future partnership investments and the anticipated growth of the total fund,” said Reinhardt. “Over 50 investments have been identified as possessing near-term liquidity potential, representing up to roughly $1.5 billion in upcoming realisations.”

This article first appeared in affiliate publication Buyouts