Milwaukee To Make Pledge Next Year; Needs Consultant

The Employees’ Retirement System of the City of Milwaukee anticipates making at least one private equity commitment next year, although the amount of the pledge has not yet been determined. In addition, in light of Mercer LLC’s decision to discontinue advising public pensions, the pension fund is now discussing the firm’s replacement.

Areas of interest to the $4.3 billion pension fund include small and mid-market buyouts, said Chief Investment Officer Tom Rick, but it has not yet been decided if the pledge will go to a fund of funds or directly to a fund.

Earlier this year, the Employees’ Retirement System of the City of Milwaukee picked Abbott Capital Management, FLAG Capital Management, Hamilton Lane, Mesirow Financial and Portfolio Advisors as finalists for its first investments in private equity. The pension ended up making commitments of about $40 million each to funds-of-funds managers Abbott Capital Management and Mesirow Financial Private Equity.

The pension fund’s current private equity allocation stands at about 2 percent, with a target allocation of 5 percent. The LP’s former consultant, Mercer LLC, recommended investing in private equity about two years ago as part of an asset liability study. “We didn’t have exposure, and we were trying to diversify the portfolio,” said Rick. “Our allocation at that time included public equity, fixed income and private real estate.”