Pennsylvania Public School Employees’ Retirement System, Harrisburg, announced a $935 million sale on the private equity secondary market.
The $79.5 billion fund’s investment staff disclosed the sale of 16 undisclosed private equity funds to the board at its March 21 meeting, a news release said.
Details of the sale, which is expected to close on March 31, were not provided. It is the second large sale of PennPSERS’ private equity interests in six months. The pension fund sold its interest in 13 private equity funds on the secondary market for $822 million in a deal that closed on Sept. 30.
A presentation by staff at the pension fund's March 20 investment committee meeting said this sale, like the one before it, is being executed to reduce its overallocation to private equity. As of Dec. 31, the actual allocation to private equity was 14.9%, well overweight that asset class’s 12% target.
Benjamin Cotton, the pension fund’s chief investment officer, has previously aired his desire to lower the pension fund’s overall target to private investments.
"We're at 36% (actual) private allocation right now, but our target's 30%," he said in an interview with P&I in December 2023. "We'd like to take that down another 6% (to 24%). That sounds like a lot, or maybe it doesn't sound like a lot, but to get there takes a while because of the nature of the allocation."
Since the pension fund is overallocated, Cotton and his staff have moderated their commitment pacing accordingly until they reach the current 30% or slightly lower.
"I'd like to be slightly under target because you've got more flexibility to manage the portfolio with public assets than you do with private assets," Cotton said in that December 2023 interview, "but there is a role for both types of assets in the portfolio longer term."
