The Chicago Firemen’s Annuity and Benefit Fund, a big backer of funds of funds, is looking to position itself to profit from the boom in the secondary market. The limited partner just unveiled two pledges to the strategy totaling $15 million, and it has a third commitment pending.
The $800 million plan sponsor promised $7.5 million apiece to Goldman Sachs and Adams Street Partners. Goldman Sachs Vintage Fund V, expected to grow to between $3 billion to $5 billion, is earmarked to buy secondary interests for anywhere from $1 million to more than $1 billion, across all private equity strategies and geographies. The aim is to acquire interests in existing limited partnerships and in portfolios of direct company investments from large institutional investors.
The fundraising goal for Adams Street Partners Global Opportunities Secondary Fund II is $600 million. Adams Street Partners plans to use the vehicle to acquire interests in venture capital, buyout, mezzanine debt, restructuring, distressed debt and special situations funds.
Chicago Firemen’s target allocation to private equity is 4 percent. At present, the limited partner has made capital commitments totaling $35 million to the asset class, all through funds of funds. The LP has backed four BA Partners fund-of-funds vehicles (Chicago-based BA Partners is the mergers and acquisition division of Banc of America Securities); one fund managed by Chicago fund-of-funds manager Muller & Monroe Asset Management LLC, which invests in emerging managers; and one fund managed by Chicago fund-of-funds manager Mesirow Financial.
The pension fund has backed secondaries since early 2005, said Michael Moran, CIO, when it pledged to BA Partners’s New Century Fund, one of the four BA funds of funds the LP has backed.