Merced County pension sets $50m PE target for 2024

Merced County Employees’ Retirement Association plans to commit $50 million to its private equity program this year.

Public pension systems are in the middle of finalizing private equity pacing plans for the coming year. Merced County finds itself in a unique position as it continues to build its private equity program to reach its target while also managing a piecemeal legacy portfolio.

Merced County discussed its private equity program at its December 14 board meeting. Buyouts reviewed board documents related to the discussion.

According to a presentation from consultant Cliffwater, the $1.1 billion Merced County system currently allocates 13.7 percent of its total fund to private equity. The system upped its target to 15 percent in 2018, up from 9 percent.

Since 2020, Merced County has averaged $50 million in annual commitments, according to Cliffwater.

According to the presentation, the system plans on making between five to 10 investments next year of between $5 million-$15 million each.

Merced County targets 60 percent of its private equity program to buyouts, 20 percent to venture capital and 20 percent to opportunistic funds, the presentation said.

The system’s private equity program has had starts and pauses.

According to Cliffwater, Merced County made annual commitments to funds of funds between 2004-07. Funds of funds commitments were also made in 2011, 2013 and 2014.

The system has received $99 million in distributions against $62.3 million in contributions through its legacy portfolio, Cliffwater said.

According to Cliffwater, Merced County’s legacy portfolio has an unrealized value of $16.3 million.

Merced County started committing directly to PE funds in 2017, according to the presentation.

The unrealized value of investments made since 2017 stands at over $138 million, according to Cliffwater. Merced County has paid $124 million in contributions to these funds, which have returned $37 million.