LACERA tees up more secondaries, makes new commitments to PE and VC

  • LACERA has hired Greenhill Cogent to pursue secondary sales
  • Plans to sell $26.7 mln stake in a 2007 vintage buyout fund
  • New commitments include a group of GGV Capital funds

The $56.7 billion Los Angeles County Employees’ Retirement Association has an agreement to sell a $26.7 million stake in an older-vintage private equity fund, and is considering other secondary sales.

The retirement fund has a 10.1 percent current allocation to PE, but it is in the midst of reshaping its investment in the asset class to focus more on the “core” general partners within its portfolio.

LACERA hired Greenhill Cogent and two other firms earlier this year to help it identify exactly what to sell after a competitive request for proposals. Its RFP 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 its long-term strategy. LACERA will continue to pursue secondary sales on an opportunistic basis, according to LACERA senior investment officer Christopher Wagner.

“Greenhill is one of three secondary advisors selected by the LACERA Board to assist the Trust with selling existing interests in private equity funds on an opportunistic basis,” Wagner said. “There is no existing contract and each sale is opportunistic.”

At its October meeting, LACERA reported that that it had sold its $27 million stake in Jordan Co’s Resolute Fund II. The system had committed $60 million to Resolute Fund II, a buyout fund that closed on $3.6 billion in December 2007.

LACERA’s investment in Resolute Fund II had an unfunded commitment amount of $5.86 million and a net asset value of $26.7 million.

The system also approved a new commitment to Siris Capital’s Siris Partners IV, a fund that aims to acquire mid-market companies in North America, with a target fund size of $3 billion.  LACERA has committed $100 million to the fund, Wagner said.

LACERA also noted that it has launched a search for an investment officer to focus on venture capital funds, and it plans to review its co-investment program structure by year’s end.

At its September meeting, LACERA committed $550 million to four PE funds. The board approved two new commitments: $100 million to Riverside Micro-Cap Fund V, Riverside Co’s small buyout strategy targeting the IT, consumer, healthcare and industrial sectors in the United States; and 150 million euros ($175 million) to Triton Fund V, Triton’s buyout strategy targeting middle-market companies, primarily in Northern Europe, in the industrial, business services, consumer, and healthcare sectors.

Investment staff also reported renewed investment with existing general partners in LACERA’s portfolio. The pension system committed $180 million to Hellman & Friedman’s ninth buyout fund, which will focus on financial and business services, software/internet and digital media, consumer discretionary, and healthcare companies; and $100 million to three GGV Capital venture funds.

The GGV allocation will be split among GGV Discovery Fund II, which focuses on early-stage investments; GGV Capital VII, which will provide follow-on capital to GGV Discovery II companies and other high-growth early-stage companies; and GGV Capital VII Plus, which will provide later-stage capital to GGV Capital VII companies.

GGV on Oct. 16 announced a $1.88 billion close for its latest group of funds, with $1.36 billion going to GGV Capital VII and VII Plus, $460 million going to GGV Discovery II, and $60 million for GGV Capital VII Entrepreneurs Fund.

“What we like most about GGV is the firm’s consistent and unified approach to the two largest venture capital markets globally — the U.S. and China,” LACERA Senior Investment Officer David Chu said in a GGV news release.

“We believe these markets will continue to produce the world’s leading technology companies and that GGV will continue to be a trusted partner to many of them.”

Action Item: See agenda for LACERA’s Oct. 10 Board of Invesment’s meeting: https://bit.ly/2P4A5sD

Updated and corrected: An earlier version of this story incorrectly listed the Siris Capital IV investment as a potential secondary sale. It is a new commitment. The story has also been updated with a quote from LACERA’s Christopher Wagner.