Alaska Permanent Fund Corp., Juneau, has approved a strategic plan to make direct private equity investments beginning with deals ranging from between $50 million to $200 million per year and building out an internal direct investments team.
The $73.8 billion sovereign wealth fund's board approved the plan at an Oct. 30 meeting, said spokeswoman Paulyn Swanson. Previously Alaska Permanent had only committed to investing in external private equity funds.
The approval was part of a review that APFC has undertaken to revise its overall strategic plan in the coming years.
The sovereign wealth fund currently has a team of seven investment professionals concentrated on private equity, according to a presentation included with Oct. 30 board meeting materials.
The initial program can be launched quickly as existing staff has the capacity to source execute on one to two opportunities every year, the presentation said.
There will be an initial focus on buyouts of cash flow-positive U.S. business, with a target of $50 million to $100 million per deal initially with between 25% and 50% ownership.
Adding the direct investment capabilities will provide a net savings of $22 million over four years, according to the presentation. Among the next steps would be to build out the direct investment team, funded through fee savings, utilizing a combination of transfers and news hires.
The board's approval of the private equity plan is part of an overall strategic review, the remainder of which will be up for review at the board's Dec. 13-14 meeting. Other initiatives under consideration include opening offices for internal investment staff outside Alaska.
As of June 30, APFC's actual allocation to private equity and special opportunities was 19.7%.