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LA County continues mid-market push with Harvest commitment

  • Los Angeles County commits to Harvest for first time
  • $48.4 bln pension prioritizes small, mid-sized managers
  • Also backs Central Europe specialist Gilde

The Los Angeles County Employees Retirement Association greenlit two commitments to private equity at its November 12 meeting, Principal Investment Officer Christopher Wagner said in an email.

The $48.4 billion pension committed up to $125 million to Harvest Partners VII. This is LACERA’s first commitment with Harvest Partners, which set a $1.5 billion target with a $2.2 billion hard cap for its latest flagship vehicle.

LACERA was drawn to the fund because of Harvest’s “consistency across cycles,” according to an investment memo. Each of the firm’s three previous funds — 2002, 2007 and 2011 vintages — netted internal rates of return in excess of 20 percent. The firm’s most recent fund netted a 20.9 percent IRR and 1.39x multiple as of June 30, which places the vehicle firmly in Cambridge Associates’ top quartile.

Los Angeles County also committed 75 million euros ($81 million) to Gilde Buy-Out Fund V, a central European buyout fund targeting middle-market companies. Gilde Buy-Out Partners set a 900 million euro target with a 1.1 billion euro hard cap, according to pension documents.

LA County focused its private equity efforts on small and middle-market managers in 2015, including commitments to Juggernaut Capital Partners and Excellere Partners’ latest flagship funds. In September, the pension allocated $300 million to a separate fund-of-funds account with Pathway Capital Management for investments in small buyouts, venture capital, special situations and international funds. LACERA is underweight in many of those strategies, according to a September pension memo made available through a public records request.

LACERA valued its portfolio at $4.35 billion as of September 30, according to pension documents. The pension was 1.5 percentage points short of its 11 percent target for the asset class as of the same date.

Action Item: Reach LACERA at 626-564-6000.