Los Angeles City Employees’ Retirement System (LACERS) will invest up to $483 million in private equity funds to meet the requirements of a new asset allocation mix the public pension fund adopted in mid-December.
At its Dec. 13 meeting, the $6.9 billion pension fund’s investment committee upped its private equity allocation to 7% from a 5% target it had maintained since 1997.
Although this is not LACERS’ first foray into private equity, its new private equity target could double the amount it invests in private equity funds. Since 1997, LACERS has committed about $230 million to 25 buyout and venture capital funds – short of the $345 million that the 5% allocation allowed.
LACERS has not said how it will invest the capital, nor has it set a time frame for deploying it. Dan Gallagher, LACERS’ chief investment officer, would not comment for this story.
LACERS is already a limited partner in funds managed by Blackstone Group, Kohlberg, Kravis & Roberts, Madison Dearborn Partners, Welsh, Carson, Anderson & Stowe, InterWest Partners, Menlo Ventures, New Enterprise Associates, Oak Investment Partners and Summit Partners.
LACERS’ renewed interest in private equity highlights a trend that has been unfolding over the last 12 months: At least six other public pension funds have made first-time allocations to private equity funds or upped their alternative asset allocations. About $1 billion of new investment capital is expected to pour into the market over the next several years as the pension funds outline investment strategies and make their first commitments.
The list of new investors, or investors that have upped their private equity allocations, includes Indiana State Teachers’ Retirement System, Missouri Public School Employees’ Retirement System, San Bernardino County Employees’ Retirement System and the State of Illinois.