It doesn’t happen that much these days, but a pension system has established its first allocation to private equity.
Better late than never?
Coral Gables Retirement System, which manages about $433 million, set a target to PE of between 3 percent and 5 percent. Coral Gables’ entrance into private equity has taken shape at its board meetings throughout 2023. Buyouts reviewed broadcasts of these meetings along with board minutes.
Dave West, senior consultant with the system’s adviser AndCo Consulting, promoted private equity’s returns and its buffer against public market volatility when suggesting the system add the asset class to its portfolio at Coral Gables’ February board meeting.
“Publicly traded stocks got crushed last year. Private equity is just starting to catch up. Private assets are very slow to adjust in their market price. That’s a nice benefit to private investments along with their total return,” West said.
The system’s first commitments were $10 million in April to HarbourVest’s Dover Street XI fund and $5 million in March to Taurus Private Markets Fund II, a fund-of-funds led by Kevin Campbell and Eric Wilcomes, who both previously worked for the private markets team at DuPont Capital Management.
Taurus’s second fund has a 10-year term and three, one-year extensions, according to Campbell.
Taurus will make a GP commitment equal to 1 percent of the total fund size not to exceed $1.5 million, according to its presentation. The fund has a 5 percent carried interest rate with an 8 percent preferred rate of return.
According to the presentation, Taurus will charge a management fee of 80 basis points on committed capital for the first four years of the fund, 60 basis points on invested capital for years five to seven and 30 basis points for the remaining years. Clients of consultant AndCo aren’t charged fees for the last three years of the fund term, Wilcomes said.
According to a filing with the SEC, AndCo Consulting manages $90.7 billion in assets, with $55.6 billion belonging to public pension systems as of March 2022.
The second fund will invest in 15 to 17 managers with a total exposure to 200 and 225 underlying portfolio companies, according to Campbell.
Campbell described Taurus as “like a small cap equity manager version of private equity.”
Taurus Fund II will largely invest in buyouts funds ranging between $300 million and $400 million in size. These funds invest in companies that make between $5 million and $10 million in annual profit, according to Campbell.
Buyouts funds that Taurus invested in previously include healthcare-focused Amulet Capital Partners and industrial/manufacturing specialists Edgewater Capital Partners, Rock Island Capital and Industrial Operating Partners, according to Campbell.
“It’s not the Who’s Who of private equity. It’s the ‘Who’s That?’ of private equity,” Campbell said of the buyouts managers Taurus invests in.
Taurus closed its first fund in June 2021 on $112 million, according to a press release.
Taurus Private Markets and AndCo Consulting did not return requests seeking comment.