SERS commits $245m to 6 funds

The $27bn Pennsylvania pension fund has pledged up to $245m to six private equity funds, including $135 million to two funds managed by Summit Partners.

The Pennsylvania State Employees’ Retirement System (SERS), manager of approximately $27 billion in assets, has committed up to $245 million (€190 million) to six private equity and venture capital partnerships during its board meeting yesterday.

Four of the pension fund’s commitments are to firms that SERS has previously invested in, including:  $25 million each to Audax Private Equity Fund II and Summit Partners Venture Capital Fund II, $35 million to Morgenthaler Partners VII and $110 million to Summit Partners Private Equity Fund VII.

In addition, SERS has pledge $25 million each to JMI Equity Fund V and OCM/GFI Power Opportunities Fund II, two general partners that the Pennsylvania pension fund has not invested with before.

Of all the firms the pension fund committed to, SERS has the longest relationship with Summit Partners, having invested approximately $125 million in Summit’s three previous private equity/late-stage venture capital funds and $8 million in Summit’s first early-stage venture capital fund, the $180 million Summit Accelerator fund, which closed in 1999.

SERS generated a return of 15.1 percent last year, marked by a strong performance in its private equity investments, which were up 27 percent at the end of 2004, noted Peter Gilbert, SERS chief investment officer. As of December 31, 2004, SERS had approximately $3 billion invested in venture capital and private equity funds, representing 11 percent of the total pension fund’s holdings.

Including the six commitments above, SERS has pledged approximately $550 million in 2005 to a range of US and European private equity and venture capital firms.