Pennsylvania State Employees’ Retirement System Commits to Series of PE Funds

The Pennsylvania State Employees’ Retirement System (SERS) moved closer to its private equity pacing target, as its investment committee voted to commit to four new funds despite concerns by board members about one of the selected firms.

The $39.9 billion system approved $100 million to Sentinel Capital Partners VII, L.P., $25 million to Sentinel Junior Capital II, L.P., $100 million to Veritas Capital Fund VIII, L.P., and $25 million to Veritas Capital Sidecar Co-Investment Vehicle.

SERS’ board committed to Sentinel Capital Partners despite concerns by several board members – most notably Dan Ocko, who is the designee for state Rep. Dan Frankel.

Specifically, Ocko questioned Sentinel’s “trust” after it said in a questionnaire that it had a mentoring program for women and minorities but then failed to disclose appropriate information about it. Ocko also was uncomfortable with Sentinel taking a 25% carry rather than the traditional 20%. He was one of three board members to vote against the commitments to Sentinel.

SERS had previously invested in Sentinel Capital Partners V, L.P., a 2015 vintage fund.

With the commitments to Sentinel and Veritas, SERS has now committed $810 million to private equity funds in fiscal year 2021-2022. The system originally had a $1.3 billion annual pacing to private equity but reduced it to $1.1 billion earlier this year.

Other private equity firms that SERS has committed to during the fiscal year include Thoma Bravo, Francisco Partners, Ares Management, LEM Capital, PSG Europe and Clearlake Capital Partners.
The investment committee also approved a $100 million allocation to Blackstone Real Estate Partners X, L.P. – a fund that has received backing from a number of other public pension funds and is on course to be the largest-ever private equity real estate fund.