Firms & Funds

LACERA hires Greenhill Cogent to sell private equity stakes

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CalPERS, pension fund, private equity
The iconic Hollywood sign overlooking Southern California's film-and-TV hub in Los Angeles on Jan. 1, 2017. Reuters/Kevork Djansezian
  • Assets Under Management: $56.8 bln
  • PE Allocation: 9.9 pct/10 pct target
  • Why this is Important: US public pensions use secondary market to manage PE portfolios

Los Angeles County Employees Retirement Association hired Greenhill Cogent to help it sell a portfolio of private equity interests, Chris Wagner, senior investment officer in private equity at the system, confirmed for Buyouts.

LACERA ran a competitive process for the secondaries mandate that included Greenhill Cogent, Evercore and Campbell Lutyens, pension documents say.

Greenhill Cogent will help LACERA identify exactly what to sell. It’s not clear how big the portfolio could be; two secondary-market sources said it could be as large as $1 billion of net asset value.

LACERA’s request for proposal said it had about 130 LP interests in funds valued at $1.4 billion connected to PE firms it no longer considered a core part of the system’s long-term strategy.

“LACERA is exploring a sale of all or a portion of those interests to streamline the portfolio, reduce administrative burden and to allow resources to be fully dedicated to key relationships,” the RFP said.

“[We’re] not sure of the NAV we are selling just yet; working on that now,” Wagner told Buyouts. A spokesman for Greenhill Cogent declined to comment.

LACERA’s RFP also said the system may engage the adviser to acquire secondary interests as well

LACERA’s PE portfolio had about $5.5 billion of net asset value as of April. The $56.8 billion retirement system held 9.9 percent of its assets in PE, close to its 10 percent target allocation.

Since the inception of its PE portfolio, LACERA made about $15.2 billion of total commitments, with $12.9 billion active and $2.2 billion exited as of Dec. 31, 2017, pension documents said.

Unfunded commitments came to about $4 billion as of that date.

The portfolio was generating a 16.09 percent net internal rate of return and a 1.66x total-value-to paid-in multiple since inception as of year-end.

Several large U.S. public pensions are using the secondary market to help manage their PE portfolios. Maryland Retirement System issued an RFP earlier this year to hire a secondaries adviser to help it sell part of its PE portfolio.

The average high secondary bid for all funds was 93 percent of net asset value last year, a 400-basis-point increase from 2016, intermediary Greenhill Cogent said in its full-year 2017 secondary-volume report.