Contra Costa pension wants more private equity, with eye toward new relationships

The system is trying to balance the art of increasing commitments while remaining cautious and disciplined in selecting managers.

One of the newer entrants to private equity wants to significantly increase investment pace to the asset class but is finding out that building new relationships is not so easy.

Contra Costa County Employees’ Retirement Association wants to boost its commitment pacing to around $450 million annually, up from the range it’s been following of between $200 million and $350 million per year.

This will put the system on track to hits its recently increased 15 percent private equity allocation target, which it plans to reach over 10 years.

Challenges to building the program include relationship building and disciplined portfolio construction, according to Rishi Garbharran, CCCERA’s private equity investment officer.

“I do see challenges in increasing the pacing plan, to get quality managers and funds and to get into the right investment, you have to balance the two priorities of pacing and portfolio management,” he said. “Not easy to ramp up pacing, having to relationship-build with new managers and that takes time.” He added that for the commitments made this year, he started building those relationships back in 2018.

Since 2019, CCCERA committed roughly $380 million across eight commitments, six of which were to new managers.

“We have to remember that we are a young primary PE program right now and we don’t have a lot of re-ups. Those are important as multiple commitments to the same fund managers allow us to put more capital to work by leveraging the work we did by building that relationship,” Garbharran said. “We are not yet at that point, but we will get there soon.”