Alaska Shoots for $3 Billion in Private Markets Investments Next Year

Robust growth anticipated for its direct and co-investment strategies across private equity, private credit, and infrastructure.

The Alaska Permanent Fund Corp. is gearing up for one of its most robust investment years yet, with almost $3 billion on the agenda to be allocated towards investments in private markets strategies.

The sovereign wealth fund agreed to invest or commit approximately $1.6 billion under its private equity and special opportunities umbrella, with the flexibility to go over or under the target by $550 million, depending on opportunities.

The team also agreed to engage about $1.3 billion to the private income portfolio, with the flexibility to shoot around the target by $300 million. It’s a bit slower than its FY 2019 target, due to the portfolio’s allocation as a percentage to the overall fund being a bit over target. The two allocations will be spread across fund commitments, direct investments, and the fund’s highly profitable co-investment strategy, which Chief Investment Officer Marcus Frampton explained how he managed to attain a 60% return with CIO a few weeks ago.

“APFC does try to maintain a largely stable deployment pace across private markets year-to-year without really attempting to “time the cycle” on the new deployment side,” Frampton said on the plans.

Private equity and private incomes are expected to generate annual net returns of approximately 12% and 7.25%, respectively. Growth of the APFC’s private equity exposure is illustrated below:

The fund intends to increase its private equity allocation through direct and co-investments, while at the same time lowering the portfolio’s concentration towards commitments to growth equity funds, and direct ownership stakes in general partnerships.

On the side of its private income exposure, which spans infrastructure, private credit, and income opportunities, the portfolio has grown considerably over the past few years with a particular focus on growth within its infrastructure allocation.

The two pacing plans assume a net growth rate for the fund of about 2% for the next few years.

Frampton recently joined CIO for an informative podcast on the fund’s portfolio and his opinion on today’s market conditions. You can listen to the podcast here.

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