San Francisco pension system approves alternatives consultants

San Francisco’ Employees’ board approved hiring of the two firms at its meeting in August, subject to further contract negotiations.

Under the terms of the agreement, Cambridge will be retained as the primary alternative investment consultant for advisory services, while TorreyCove will have primary responsibility for alternative investment monitoring and reporting services, according to documents from the pension system.

TorreyCove and Cambridge were chosen from a list of four finalists that made the cut over the summer. The list also included LP Capital Advisors and incumbent Portfolio Advisors.

The new consultant hiring is only the latest in some big changes at the system, which as of June 30, 2012 had $15.3 billion in assets, according to the system’s annual report, the most recent data available.

Earlier this year, San Francisco Employees’ snagged Art Wang, the director of private equity at the massive New York State Common Retirement Fund, to head up private equity, real estate and real assets.

San Francisco Employees’ alternative investment program launched in 1987, and through December 31, 2012, it had committed $5.94 billion to 268 private equity funds in buyout, venture capital and special situations, according to a review of the program in June.

The program generated a net IRR of 16.5 percent. As of December 30, 2012, the program represented 12.6 percent of the system’s assets, below the 16 percent target allocation for alternative investments, according to the review, which was included in minutes from the pension system’s June board meeting.

Under Wang, San Francisco Employees’ has made several commitments, including $50 million to Apollo Global Management’s eighth fund, which is targeting $12 billion with a $15 billion hard-cap, according to board minutes from August. The system also committed €35 million to Nordic Capital Fund VIII, which has a €3.5 billion hard-cap, and $15 million to Thoma Bravo Special Opportunities Fund I, which is seeking $300 million.

Chris Witkowsky is editor of peHUB