The Los Angeles County Employees Retirement Association has chosen Pathway Capital Management to manage a separate account of $300 million earmarked to commit to middle-market buyout funds over the next three years. Pathway Capital, which has offices in Irvine, Calif., West Warwick, R.I., and London, edged out Hamilton Lane for the assignment.
Because no RFP was issued for this invitation-only search, little information about the mandate was made public. However, some of the middle-market pledges the limited partner has made previously include $35 million to Behrman Capital III LP; $60 million to Berkshire Fund IV LP; $25 million to Excellere Partners; and $75 million to GTCR Fund VIII LP.
Lacera, with assets of $42 billion, has an actual allocation to private equity of 8.4 percent, or about $3.5 billion, above its target allocation of 7 percent, but within its approved range of 4 percent to 10 percent. In October, the LP said it had committed $735 million to private equity funds so far in 2008, but that it planned to slow its investment pace for the rest of the year. Lacera’s commitment pace for 2009 has not yet been formulated, according to Christopher Wagner, senior investment officer, private equity.
Pledges made this year include a commitment of up to €50 million ($73 million) to Nordic Capital Fund VII, run by Stockholm-based Nordic Capital to make control investments in Denmark, Finland, Norway and Sweden in the health care, industrial and consumer discretionary sectors; up to $75 million to Madison Dearborn Capital Partners VI LP, managed by Madison Dearborn Partners, a North American buyout shop that specializes in communications, consumer goods, financial services and health care; up to $75 million to Onex Partners III LP, run by Onex Corp. to invest in carve-outs from U.S.-based multinational corporations, mostly in the aerospace, health care and industrial sectors; up to €65 million ($100 million) to CVC European Equity Partners V LP, a pan-European buyout fund run by CVC Capital Partners; up to $100 million to First Reserve Fund XII LP, First Reserve Corp.‘s global fund to invest in a variety of energy industry sectors; up to $100 million to mega-buyout shop TPG Capital’s TPG Partners VI LP for buyout and growth capital investments in the United States, Europe and Asia in large companies in the business and financial services, media, pharmaceutical and biopharmaceutical industries; and $150 million over three years to JP Morgan Private Equity for private equity emerging managers.
Pathway Capital was founded in 1991 by Albert M. Clerc, Karen J. Jacobi, Douglas K. Le Bon and James H. Reinhardt. The group later expanded ownership of the firm to include an additional 10 senior-level professionals. Pathway Capital establishes and manages specialized funds of funds for institutional investors, working with more than 50 institutions since 1991 and committing roughly $45 billion in more than 300 investment partnerships in a variety of private equity strategies.