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San Francisco doubles commitment pace with new PE target

  • Retirement system to deploy $1.5 bln by year-end 2016
  • Plan doubles pace of San Francisco’s annual commitments
  • $20 bln pension 7 pct below its target allocation

The San Francisco Employees’ Retirement System plans to commit roughly $1.5 billion to private equity between now and the end of 2016 to meet a new asset allocation target, according to retirement system documents.

“For the past 1.5 years SFERS has more than doubled the annualized commitments we made to private equity prior to 2014, and staff plans to sustain that pace going forward,” according to the asset allocation review obtained through a records request. San Francisco reviewed its asset allocation at its May 13 board meeting.

San Francisco’s $20 billion pension held an 11 percent allocation to private equity as of March 31, 7 percentage points below the 18 percent target it set at its February meeting. The retirement system’s previous private equity target was 16 percent.

San Francisco’s investment staff wants to commit approximately $1 billion to private equity each year in 2015 and 2016, according to the plan. The investment pace would bring the pension in line with its 18 percent target in five years, depending on the timing of general partners’ capital calls. The pension already committed $485 million to private equity funds during the first quarter, leaving another $1.5 billion for investment through the rest of the year and 2016, according to the investment plan. In April, San Francisco allocated $50 million to Blackstone Group’s latest flagship fund.

San Francisco typically invested between $350 million and $400 million per year prior to 2014, according to retirement system documents.

The pension took a more aggressive approach last year when it allocated $895 million across several high demand funds, including stakes in Hellman & Friedman Capital Partners VIII, Centerbridge Capital Partners III and Advent Latin American Private Equity Fund VI.

In addition to reviewing its asset allocation, San Francisco committed 100 million euros ($87.5 million) to Niam Nordic VI at its May 13 meeting, Commission Secretary Norm Nickens told Buyouts in an email. Niam AB is targeting 800 million euros for a commercial and residential real estate fund that will acquire properties in Sweden, Finland, Norway and Denmark.