San Francisco pension commits $115 mln to GTCR, CIM funds

  • GTCR XI Fund receiving commitment of up to $50M
  • SFERS pledges up to $65M for CIM Opportunities Fund VIII
  • Fund switching consulting firms for private equity funds

The San Francisco Employees’ Retirement System OK’d $115 million in commitments to funds from buyout shop GTCR LLC and real estate investor CIM Opportunities in the $15.3 billion pension fund’s latest move into alternative investments.

The SFERS retirement board approved the commitments to GTCR and CIM at its Oct. 9 meeting, according to a spokesperson.

The pension fund agreed a $50 million commitment to GTCR LLC for GTCR XI, L.P. The Chicago firm is seeking $3.25 billion in commitments for its eleventh fund, consistent with the size of its previous fund. The fund is expected to be oversubscribed, with a hard cap of $3.75 billion, according to a memo to the board from consultant Portfolio Advisors. GTCR is targeting a first close in November with a final close expected in early 2014.

Like earlier funds, GTCR XI will employ a growth-oriented buy-and-build strategy in the U.S. middle market with a focus on four key areas: information services and technology, financial services and technology, health care, and growth business services.

Past limited partners for GTCR include Abbott Capital, Allstate, AlpInvest, Commonfund, HarbourVest, JP Morgan, Minnesota State Board of Investment, State of Wisconsin Investment Board, Massachusetts Pension Reserves Investment Management Board, Nestle, and Yale.

All told, GTCR has invested $10.4 billion in 233 firms and has generated total value of $21.7 billion, a 2.1x gross multiple of invested capital and a gross IRR of 35.6 percent, according to the memo.

Portfolio Advisors made the recommendations for the investments in GTCR, although the pension system is in the process of switching to TorreyCove Capital Partners as adviser.  Under standard procedure for contracting, the process is currently in a 60-90 day period for final negotiations, according to a spokesperson.

The pension system also pledged $65 million to the CIM Opportunities Fund VIII from Los Angeles-based CIM Group, which is targeting $2 billion for the fund, according to a memo to the retirement board. Thus far, CIM has closed on $675 million in commitments for the fund and is expected to hold two additional closings in November and January.

“CIM will continue to invest in real estate using its proven method of focusing on markets with compelling demographics and growth,” the memo said.

CIM offers a 19-year track record of managing four opportunistic, two core and one infrastructure fund for institutional investors.

The latest fund is targeting a gross IRR in excess of 20% and a gross equity multiple of greater than 2x. The investment will fall within the opportunistic segment of SFERS’s real estate program as the pension system’s third commitment with CIM.