Permanent Fund Board approves private equity commitments
DEC 15 - The Alaska Permanent Fund Board of Trustees adopted changes to the Corporation’s investment regulations, reviewed Fund performance and heard presentations on expected global stock performance and new investment strategies at its meeting on December 10 and 11 in Anchorage. In addition, the Board made two commitments to Dyal Capital Partners for investments in established private equity firms.
“It is to Alaskans’ advantage when we are able to make these sort of direct investments because the management fees are much lower than if we relied on an intermediary manager,” said Bill Moran, Board Chair. “Over the years we have increased the Board’s knowledge of private equity investments and built up the Corporation’s internal capability, so we are comfortable taking on internal investments.”
The Board-approved investment is in two parts: $50 million is committed to Dyal Capital Partners III, a fund that focuses solely on acquiring strategic minority positions in established private equity managers, and an additional $500 million in co-investment rights was approved through a pool with which Dyal makes co-investments alongside the Dyal III fund. The advantage to the co-investment rights is that they are at a lower fee structure for the Permanent Fund, leveraging the research and due diligence of the primary fund to grow the allocation with cost advantages. The $50 million commitment and $500 million in approved co-investment rights are in addition to a $500 million commitment to Dyal Capital Partners III that was recently approved at the staff level pending the successful completion of due diligence and legal agreements.
The Board adopted amendments to the regulations list of allowed Permanent Fund investments, after putting the comments out for public notice prior to the meeting as required by state law. The amendments included changing the requirements for outside advisors on new investments to conform to industry changes that have occurred since the regulations were first adopted, and moving asset class restrictions to the Board-adopted Investment Policy, where they should more appropriately reside. In 2005 the Board was first granted authority by the Legislature to create a list of allowed investments in regulation, replacing the list that had been in statute since the creation of the Corporation.
During the meeting, the Board’s general consultant Callan Associates provided an overview of the Fund’s performance by asset class and individual mandate. In addition, AEW Capital Management provided a review of the real estate investment trust portfolio (REIT) that the firm manages on behalf of the Fund.
The next regular meeting is scheduled for February 25 and 26 in Juneau.