LA City commits to Angeles Equity as part of push into smaller funds

  • LACERS lacks exposure to small- and mid-market funds
  • Angeles Equity targets $300 mln with $350 mln hard cap
  • Jordan Katz and Timothy Meyer lead firm

The Los Angeles City Employees’ Retirement System (LACERS) boosted its exposure to small- and middle-market funds with a $10 million commitment to Angeles Equity Partners’ debut vehicle, according to its November 10 meeting materials

The commitment to Angeles Equity is consistent with LACERS’ plan to emphasize middle-market and lower middle-market managers in 2015, according to pension documents. Its private equity portfolio’s exposure to small- and mid-market buyout funds stood at 26 percent as of June 30, 2014, well short of its 35 percent target for the strategy.

Angeles Equity set a $300 million target and $350 million hard cap for its first fund. At that size, the Los Angeles-based firm qualified for a commitment under LACERS’ emerging investment manager program, which targets firms with less than $500 million in assets on their first or second fund.

Angeles recently held a first close on $100 million and expects to reach its $300 million target by mid-2016, sources told Buyouts in October.

Angeles, a Gores Group spinout led by Jordan Katz and Timothy Meyer, acquires controlling stakes in underperforming or stressed companies in a broad range of industries, including automotive and manufacturing. Katz and Meyer co-led the industrials group at Gores before leaving to launch Angeles in 2014.

The firm’s debut will likely make between eight and 12 investments ranging from $20 million to $40 million in size, according to LACERS documents.

Angeles will charge LPs a 2 percent fee on aggregate commitments through the fund’s five-year investment period, after which LPs will pay an annual fee equal to 2 percent of the adjusted cost of all unrealized investments, according to LACERS documents.

The firm will offset LP management fees with 100 percent of the directors’ fees, transaction fees, investment banking fees, break-up fees, advisory fees, monitoring fees and other similar fees charged to the fund’s underlying portfolio companies.

Angeles Equity will take 20 percent of any carried interest generated by the fund once it clears an 8 percent hurdle, according to pension documents. The GP will commit at least $6 million to the fund.

Moelis & Company acts as a placement agent for the fund.

Action item: Reach Angeles Equity Partners at 1-310-844-99200.