Alameda County proposes expansion of emerging manager program

Many emerging managers have faced the squeeze in a difficult environment.

Alameda County Employees’ Retirement Association may expand its emerging manager program, which would give a boost to a small segment of the market that is suffering under a slowdown in fundraising.

The tight fundraising environment and volatile economy have made it difficult for emerging managers, especially first-time funds. LPs in uncertain environments are generally happy to stick with their established relationships and eschew backing new shops. An exception are LP institutions that have allocations dedicated to backing new firms.

Alameda County investment staff and consultant Verus recommended an expansion of the $10.4 billion system’s emerging manager program to include up to Fund III.

The proposed changes were discussed at the system’s board meeting held September 14. Buyouts reviewed documents detailing the possible change.

The proposed changes would also include all managers with under $5 billion in committed AUM in any prior funds, including co-investments, according to the documents.

The recommendations also include adding private credit and absolute return as asset classes to its emerging manager program.

The proposed changes would also allow the total fund to have an allocation of up to 10 percent to emerging managers, an increase from the previous allotment of 5 percent, according to the documents.

Jeff Rieger, general counsel for the system, said the proposed revisions would go before the investment committee for review at a future meeting.

Alameda County has committed $232.6 million to 13 emerging private equity managers since 2009, according to the documents.

Alameda County currently allocates 9.6 percent to private equity, below its 11 percent target.