Sacramento County pension eyes eight PE commitments in 2024

Sacramento County Employees Retirement System will target deployment of $250 million in commitments to private equity over the next year.

As LP organizations set pacing plans for the next 12 months, they are contending with slower exit activity and generally overexposure to the asset class. In this situation, many are gearing down their pacing, while looking to commit to select GPs.

Sacramento County’s investment staff presented its pacing plan at its November 15 board meeting. Buyouts reviewed the presentation.

According to the presentation, Sacramento County is targeting $250 million in commitments to eight funds, with average check sizes of $35 million.

The $12.3 billion system will focus on re-ups with existing buyouts GPs, with an emphasis on sector-specific funds, the presentation said.

In 2023, the system committed $218 million to seven funds. Sacramento County initially planned on committing $260 million to nine funds, according to the presentation.

As of June 2023, Sacramento County allocates 13.3 percent to private equity, above its 11 percent target. This was down from the same time in 2022, when the system allocated 15.4 percent to private equity.

Sacramento County completed sales of stakes in four legacy funds-of-funds – three managed by HarbourVest and one by Goldman Sachs – from the 2006 and 2008 vintage years for a combined $23.9 million in 2023, the presentation said.

The system may consider a further secondaries sale in 2024, depending on pricing conditions, according to investment staff.

According to the presentation, Sacramento County looks to allocate 55 percent of its private equity portfolio to buyouts managers, 20 percent to venture capital, 15 percent to growth equity and 10 percent to distressed debt.

The system allocates 46 percent to private equity and 29 percent to venture capital, according to the presentation.

Investment staff says the overweight exposure to venture capital stems from Sacramento County’s holdings in funds prior to the 2018 vintage.

“While these funds have been impacted from valuation declines in their holdings of public market securities, they are still generating strong net multiples of over 2x,” the presentation said.

Sacramento County will likely temper its VC pacing until the exit market rebounds while also reducing its exposure, the presentation said.