PSERS approves $500m in commitments

The Harrisburg-based public pension has backed three private debt vehicles.

Institution: Pennsylvania Public School Employees’ Retirement System
Headquarters: Harrisburg, US
AUM: $72.5 billion
Allocation to alternatives: 33.2%

Pennsylvania Public School Employees’ Retirement System has approved $500 million in commitments across three private debt vehicles, according to a press release issued by the organisation.

The commitments comprise of €200 million ($225m) to ICG Europe Fund VIII SCSp, $150 million to Sixth Street Opportunities Partners V and $125 million to Bain Capital Special Situations Asia II.

Intermediate Capital Group launched Fund VIII in May 2021 with a €7 billion target size, and has raised €6 billion for the vehicle as of November 2021. ICG Europe Fund VIII will invest in subordinated debt, senior debt, structured debt and equity in French, Italian, Spanish, UK, DACH, Scandinavian and Pan-European upper middle market companies across a variety of sectors.

Sixth Street launched their fifth-series fund in June 2021 with a $3.5 billion target size. Sixth Street Opportunities V continues the strategy of thematic, control-oriented, actively managed investments with a significant focus on downside protection. The fund has the flexibility to invest across geographies, primarily in North America and Europe.

Bain Capital launched SSA II in March 2021. The fund seeks to generate attractive risk-adjusted returns by capturing value in complex situations and mis-priced assets by providing creative solutions to address capital shortfalls across Asia. It adopts an opportunistic strategy that can dynamically pivot between thematic opportunities and geographies across Asia as they become attractive.

PSERS currently allocates $5.66 billion to private debt investments, comprising 7.8 percent of its total investment portfolio. The public pension has a target allocation to private debt of 6 percent.

As illustrated below, PSERS’ recent private debt commitments have focused on corporate distressed and mezzanine vehicles which invest globally.

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