Firm: Aurora Capital Group
Fund: Aurora Equity Partners IV LP
Fund Target: $900 Million
Amount Raised So Far: $600 Million
Key Executive: Gerald L. Parsky, Chairman
Aurora Capital was founded in 1992 by Gerald L. Parsky, who served as assistant secretary of the Treasury for international affairs in the Ford Administration. Altogether, the firm manages $2 billion in private equity investments geared to industries like energy, health care, transportation, software, and aerospace and defense. The firm generally buys controlling stakes in companies with enterprise values between $100 million and $1 billion.
Among the limited partners that have already committed to Fund IV is the San Bernardino County Employees’ Retirement Association, which pledged $20 million. That pension committed $25 million to Fund III back in 2004.
Another key investor in Aurora Capital’s previous funds is the California Public Employee’s Retirement System, which has invested $650 million across four Aurora Capital funds, including $400 million to the Aurora Resurgence Fund, a 2007 vintage pool of $636 million earmarked for struggling mid-market companies.
Both of Aurora Capital’s most recent funds have performed well. The 2004 vintage Fund III, which raised $900 million, has garnered a net IRR of 14 percent and a 1.5x return multiple, according to CalPERS data from Dec. 2011. The Resurgence Fund has so far garnered an impressive 27 percent net IRR and a 2.1x return multiple.
Aurora Capital was touched by the CalPERS pay-to-play scandal when it was included in the investigative report that was prepared by Steptoe & Johnson, a prominent law firm. The report revealed testimony by CalPERS investment professionals who stated that Federico Buenrostro, the ex-CalPERS chief executive, steered millions in pension commitments to Aurora Capital. So large was CalPERS’s commitment to the firm that the pension became the source of nearly one-third of all funds the firm had raised, a level that is much higher than is typically the case.
But even though Aurora Capital was included in the Steptoe report, the report went on to say: “Despite these actions by Buenrostro, the CalPERS investment staff appears to have evaluated these proposals on their merits independently from his overtures, and we understand the fund investment that was made has, to date, fared well.”