LACERS plans up to $350 mln for PE in 2016

  • Pension set similar pace in previous three years
  • Small and middle market funds remain a priority
  • LACERS commits to Advent, TC Growth so far

The Los Angeles City Employees’ Retirement System plans to commit between $325 million and $350 million to private equity this year, a slight increase from what it allocated to the asset class in 2015, according to pension documents.

“At a pace of $325 [million] to $350 million, LACERS will potentially achieve its 12 percent exposure target in approximately two years,” wrote Portfolio Advisors in a March 8 presentation. As of Dec. 31, the retirement system had a 9.9 percent allocation to the asset class (see LACERS sector performance).

LACERS set a similar pace in each of the last three years, but total commitments to private equity have varied, according to the presentation. In 2015, the $14.1 billion pension made 17 fund commitments totaling $310 million. LACERS allocated $350 million across 18 funds in 2014.

LACERS expects to make between 12 and 15 commitments in 2016, allocating between $10 million and $40 million to each new fund. Like last year, the pension will emphasize firms raising lower and middle market buyout funds. LACERS also plans to pursue distressed for control managers this year, according to the report.

The retirement system has already been active through the first quarter. LACERS committed up to $7.5 million to TC Growth Partners and up to $10 million for DFJ Venture XII in February. In January, the pension committed up to $10 million to CenterGate Capital’s debut fund.

The retirement system also approved a commitment of up to $40 million to Advent International’s $12 billion flagship fund in February, according to pension records.

LACERS may be spare with allocations to other mega-funds this year, however. According to Portfolio Advisors, the retirement system held 30 percent of its private equity exposure in large and mega funds as of Sept. 30. LACERS will “selectively invest” in mega-buyout funds to reduce its exposure to around 25 percent.

The retirement system also plans to invest opportunistically in mezzanine and secondary funds in 2016, according to the presentation.

Action Item: To see the full Portfolio Advisors presentation, visit