PennSERS approves commitment to Sentinel after firm works on diversity

Pennsylvania State Employees’ Retirement System approved $125 million in commitments to Sentinel Capital Partners after delaying a vote due to concerns about the firm’s diversity efforts.

The full board unanimously approved a $100 million commitment to Sentinel Capital Partners VII and a $25 million commitment to Sentinel Junior Capital II at its meeting on 25 July. Affiliate Buyouts watched a webcast of the board meeting.

The board at its 10 June meeting voted to delay a commitment to Sentinel due to concerns raised by investment committee members about the company’s diversity reporting during due diligence.

Since the 10 June meeting, Sentinel executives developed a plan to address its commitment to diversity after meeting with PennSERS staff and board members, said PennSERS spokesperson Pamela Hile in a statement provided to Buyouts.

“The plan, along with Sentinel leadership’s assurances, provided a clear and positive path forward,” Hile said.

A delegate for State Representative Dan Frankel raised objections about Sentinel’s diversity efforts at the June 3 investment committee. Buyouts watched a webcast of the investment committee meeting.

In an email to Buyouts, Frankel said Sentinel hired an expert in diversity before the June meetings but “that expertise was not reflected in the proposal they submitted several months earlier.

“In the last several years my office has voiced concerns about firms telling us about diversity and ESG but not fully putting in the work. Because of my office’s involvement and the actions by several other SERS board members, SERS staff and the leadership of Sentinel, the firm was able to use their expanded management team to develop and implement real change to address those concerns,” Frankel said via email.

No details about the plan were announced. Sentinel Capital did not respond to questions seeking further comment.

In a presentation made to the investment committee, Sentinel Capital said it focuses on lower-mid-market businesses and described itself as a leader in consumer goods, business services, healthcare services and industrials.

Sentinel Capital was co-founded by David Lobel and John McCormack, who started the firm in 1994 after having worked together at the private equity affiliate of Smith Barney.