Alameda County mulls new relationship with Genstar

  • Assets under management: $8.1 bln
  • PE target allocation: 9 pct
  • PE actual allocation: 6.2 pct
  • PE strategy: The pension fund is aiming to increase pacing to meet its target allocation.
  • Whom to contact: Betsy Tse, chief investment officer, at
  • Why this is important: Alameda is building its PE portfolio with new relationships

Alameda County Employees’ Retirement Association is mulling a $33 million commitment to Genstar Capital Partners’ ninth fund targeting $5 billion.

Genstar invests in North American middle-market businesses in financial services, software, industrial technology and healthcare, targeting companies with enterprise values between $250 million and $1.25 billion.

Nebraska Investment Council committed $50 million to Genstar’s ninth fund as part of its $150 million target pacing for 2019.

Alameda County set an aggressive allocation target for PE, increasing it in September 2017 to 9 percent from 6 percent. PE allocation was 6.2 percent as of June 30, 2018.

The pension system has been actively seeking new managers and re-upping to core managers. Genstar is a new relationship. Last year, the system added CapVest Equity Partners and Audax Private Equity to its roster.

The system committed $155 million to PE funds in 2018.

Commitments included $34 million to CapVest’s fourth buyout fund, $7 million to Khosla Ventures’ sixth fund, $3 million to Khosla’s Seed D fund, $33 million to Abry’s fourth advanced securities fund, $34 million to Audax’s sixth fund and $44 million to Sycamore Partners’ third fund.

Alameda County’s PE portfolio as of June 30, 2018, included buyouts (57.3 percent), VC (32.1 percent) and debt/special situations (10.6 percent). Unfunded commitments were $532 million.

North America accounted for 84 percent of PE investments, Asia 8 percent, Europe 6 percent and the rest of the world 2 percent.

Consumer-related PE, as of June 30 accounted for 30 percent of ACERA’s commitments, followed by computer-related (19 percent), medical/health-related (14 percent), industrial products (11 percent) and energy-related (7 percent).

As of June 30, Alameda County’s $500 million PE portfolio produced a net internal rate of return of 15.6 percent since inception in 2008, documents

Buyouts produced IRRs of 15.81 percent over one year, 11.07 percent over three years, 17. 74 percent over five years and 15.33 percent since inception, as of June 30.

Buyouts returns were driven by Sycamore’s debut fund, which produced an IRR of 41.32 percent, Warburg Pincus’s 11th fund, which produced an IRR of 13.79 percent, and Avista Capital Partners’ second fund, which produced an IRR of 14.34 percent as of Dec 31, 2017, pension documents said.

Venture produced IRRs of 25.53 percent over one year, 12.94 percent over three years, 22.5 percent over five years and 20.74 percent since inception as of June 30.

Debt/special situations produced IRRs of 18.1 percent over one year, 11.52 percent over three years, 17.67 percent over five years and 15.6 percent since inception as of June 30.

Action Item: Read more on Alameda County’s investments here: