LP notes, week of Aug. 18, 2008

LACERA plans big pledge to First Reserve XII

The $42 billion Los Angeles County Employees Retirement Association (LACERA) plans to commit up to $100 million to First Reserve Fund XII, according to a document on the city pension fund’s website.

The allocation would represent one of the largest single private equity commitments made by LACERA.

First Reserve Corp. has raised more than $4.5 billion in commitments for the fund, according to a July 30 regulatory filing. The Greenwich, Conn.-based firm, which focuses on private equity opportunities in the energy industry, is targeting $12 billion, with a $16 billion hard cap. Its previous fund raised about $8 billion when it closed in July 2006.

This would be LACERA’s third pledge to First Reserve. It committed $50 million to fund X and $60 million to fund XI. The LP has a 7% target allocation to private equity. —Nancy Gordon

Capital Dynamics seeks $1B

Capital Dynamics, the Swiss asset manager, has secured an estimated $300 million to $400 million for its seventh-generation fund of funds. The target is $1 billion.

Capital Dynamics, which manages more than $20 billion on behalf of institutional investors, largely through separate accounts, expects to hold a final close on the fund of funds in the second half of 2009. That would set the stage for the roll out of an eighth-generation product in early 2010, keeping to the firm’s bi-annual timetable.

The asset manager has grown into one the world’s biggest suppliers of private equity dollars, annually committing on behalf of its clients between $5 billion and $7 billion per year to some three dozen funds.

About 55% of its investments is in U.S.-based firms, including ones that invest outside of the United States; 40% to European firms; and 5% to other firms operating in Asia and elsewhere. Buyout firms receive the majority of its commitments.

Through its funds of funds, which have about $3 billion in assets, the firm has backed such buyout groups as The Blackstone Group, Charterhouse Capital Partners, CVC Capital Partners and Fortress Investment Group. —David Toll

Iowa PERS stands on $500M to commit in 2008

The Iowa Public Employees’ Retirement System has upwards of $500 million left to commit to funds this year.

“The maximum amount that can be committed in 2008 is $800 million,” says Karl Koch, CIO of the state pension fund.

Koch estimates that about $300 million has been committed so far this year, which includes recent commitments, totaling $180 million, to a pan-European buyout fund, two North American buyout vehicles and a distressed debt fund,

Unlike many other pension funds, Iowa’s board does not approve individual commitment amounts. Instead, advisory firm Pathway Capital Management has full discretion to make commitments up to a maximum annual dollar amount approved each year by the board. Koch stresses that Pathway is not required to commit $800 million in 2008. How much actually gets committed will depend on the quality of deals and Pathway’s discretion, he says.

Iowa PERS has a 10 percent allocation to private equity.

In other news, Iowa PERS this June issued a request for proposal as it seeks a new general consultant. Its contract with Wilshire Associates expires in September. —Nancy Gordon