The board overseeing the $26.9bn Pennsylvania State Employees’ Retirement System approved allocating $75m to an opportunistic credit, distressed and structured equity fund managed by Clearlake Capital Group.

At their meeting on 28 February, the Penn Sers board voted to add the Clearlake Opportunities Partners II fund to the pension fund’s multi-strategy portfolio.

The multi-strategy portfolio replaced Penn Sers’ dedicated hedge fund bucket in 2017 as part of a portfolio revamp.

Santa Monica, California-based Clearlake was formed in 2006 by co-founders José Feliciano and Behdad Eghbali. The firm invests via public and private transactions in debt or equity securities across the capital structure of lower and middle market companies. It managed $7.8bn as of 29 June 2018, according to an SEC filing.

As of 31 December 2018, Penn Sers’ multi-strategy portfolio totaled $2.4bn, or about 8.8% of the portfolio.

The target allocation is 10%. It had returned -1.2% annualised for the trailing 12 months through December, and 1.9% since inception in October 2017. In the fourth quarter of 2018, multi-strategy returned -7.4%.

Consultant RVK assisted.

Penn Sers adds Clearlake to multi-strategy portfolio on HFM InvestHedge.