Kern County anticipates re-up opportunities with existing managers over the next two years

The $5bn system looks to build out its private equity portfolio and sees potential for new manager relationships.

Kern County Employees’ Retirement Association anticipates placing $90 million in re-ups over the next two years as it looks to build out a private asset portfolio that restarted in 2020.

The $5 billion Kern County system, based in Bakersfield, California, is in a unique situation as it hopes to reach a 15 percent target allocation to private assets, with 5 percent dedicated to private equity, by 2026. To date, the system has relationships with six managers, several of which may have plans to launch new funds over the next two years.

These details were included in a presentation by consultant Cambridge Associates outlining Kern County’s 2023 private asset pacing plan, which the board approved at its meeting held on February 8. Buyouts watched a webcast of the meeting.

The system has made six commitments to private equity shops and three to growth equity and venture capital managers since it restarted its private assets portfolio in 2020.

According to the pacing plan, Kern County has allocated up to $60 million for anticipated re-ups in 2023 plus another $30 million in 2024.

The pacing plan also allows up to $60 million for re-ups to managers in its growth and venture capital bucket in 2024.

Kern County made first-time commitments to Vista Foundation and Peak Rock Capital in 2020, Linden Capital Partners in 2021, and Rubicon Technology Partners and Accel-KKR in 2022. The system also made a re-up commitment to Warren Equity Partners in 2022 after committing to its fund in 2022.

In its growth equity and venture bucket, Kern County made commitments to Level Equity and Orbimed Private Investments IX. It re-upped with Brighton Park in 2022 after making a commitment to a previous fund in 2020.

In addition, Kern County plans on committing up to $30 million to LTG’s sixth Crown Global Secondaries offering after making a commitment to its fifth fund in 2020.

“We do expect some of these managers to come back with successor funds and we would recommend commitments to these managers if they do come back,” said Andrea Auerbach, an investing managing director at Cambridge.

At the same time, Kern County may find itself with an advantage as many LPs with established private equity programs remain overallocated to private assets due to the denominator effect, forcing them to reduce planned commitments and bite sizes in 2023.

“That could open up new relationships we can add at the margins,” said Kelly Jensen, a senior investment director at Cambridge Associates. According to the pacing plan, Kern County wants to have relationships between six and 13 private equity and venture capital managers.

Kern County has a legacy private equity portfolio with vintage years between 1997 and 2008.