Pennsylvania Public School Employees’ Retirement System (PSERS) has made a commitment of 10.6 billion yen ($100 million) to a fund managed by Japanese private equity firm Polaris Capital Group, according to a resolution passed by the US pension fund’s board.
The commitment is for Polaris Fund V, the Japanese PE firm’s latest fund that seeks to invest in the small- and mid-cap segment in Japan, with a particular focus on corporate carve-outs and business succession transactions.
This would be PSERS first investment with Polaris.
The fund, which has a target size of 150 billion yen ($1.42 billion), will follow the same investment strategy and focus that Polaris Capital has deployed since 2004, PSERS said.
Polaris Capital, founded in 2004 through a joint venture between Mizuho and Asset Management One, closed its first fund with committed capital of just under 30 billion yen ($282 million) in November 2004.
While the business succession and carve-out transactions formed the backbone of the investment strategy, Polaris also invested in other strategies. These included secondary buyouts, take privates, as well as venture and turnaround transactions.
Last February, DealStreetAsia reported that Polaris made a tender offer to privatise the country’s pharmacy chain operator Sogo Medical Holdings that could value the Tokyo-listed company at about JPY76.5 billion ($696 million).
The new fund will mainly target investments in Japanese companies or business divisions with enterprise values between $100 million to $700 million and which have the potential to expand into the Asian markets.
Aside from its commitment to the fund managed by Polaris, PSERS also committed $100 million to venture capital fund Greenoaks Capital Opportunities Fund III and another $169 million to Insight Partners Opportunities Fund I, a growth fund that targets investment opportunities in the software sector.
The $57.2-billion pension fund has been actively investing in Asia-focused funds. Last year, it committed up to $150 million to funds managed by South Korean private equity firm Hahn & Co. Historically, PSERS has invested in Asia-focused private equity funds such as Bain Capital Asia Fund II and III, Actis Emerging Markets 3, Baring Asia PE III to VI, CVC Capital Partners Asia Pacific and Navis Capital Partners.