San Diego City Employees’ readies $375 mln over three years for PE

San Diego City Employees’ Retirement System will likely commit around $375 million to private equity over the next three years through its separate account with GCM Grosvenor.

At its meeting earlier this month, the city’s investment board elected to move forward with GCM Grosvenor’s investment plan, the $7.2 billion public pension’s website shows.

The separate account will concentrate new commitments in leading middle- and large-market buyout funds, as well as shorter-duration debt vehicles and distressed-for-control funds, the investment plan says.

GCM Grosvenor will “target over-subscribed funds with what we believe represent best-in-class returns as well as funds with well-proven sourcing models,” according to the plan.

Recent commitments include allocations to funds raised by Peak Rock Capital and TSG Consumer Partners. In the past year, San Diego also picked up stakes in Crestview Partners and Pegasus Capital Advisors funds through the secondary market, GCM Grosvenor’s report shows.

Through GCM Grosvenor, SDCERS will also pursue co-investments in middle-market buyout deals and secondary-market opportunities as well.

GCM Grosvenor launched its investment program with San Diego in 2009. As of June, the portfolio includes 57 fund commitments and 33 co-investments.

SDCERS held 14 percent of its assets in a combined allocation to PE and infrastructure assets at year-end, according to a recent investment report.

GCM Grosvenor oversees about half of San Diego’s allocation, with StepStone Group managing the other half.

Action Item: For more information on San Diego’s city pension, visit www.sdcers.org

A passenger plane approaches to land as other aircraft taxi to the runway at San Diego International Airport on April 22, 2013. Photo courtesy Reuters/Mike Blake