San Mateo’s private equity program returns positive cashflow in 2022

San Mateo County Employees’ Retirement Association’s private equity portfolio was cashflow positive in 2022 as its managers successfully navigated a difficult exit environment.

A slowed exit market has resulted in reduced distributions for many LPs, which has further complicated a difficult fundraising environment. Institutions that emerged last year cashflow positive in private equity are in a strong position to continue building their programs, despite the overall slowdown.

Consultant Verus reviewed San Mateo’s private equity portfolio at the $6 billion system’s board meeting held July 25. Buyouts reviewed the Verus presentation.

San Mateo has a 7 percent target allocation to private equity. As of the end of 2022, the actual allocation was 6.8 percent, the presentation said.

According to Verus, San Mateo has been cashflow positive for six of the past seven years. In 2022, the system received $75.6 million in distributions, while contributions totaled $73.4 million.

San Mateo reported positive cashflow of well over $100 million in both 2020 and 2021, Verus said.

San Mateo has booked $586 million in realized distributions against $507.4 million in capital contributions since 2011, the presentation said.

According to the presentation, San Mateo has averaged $56.8 million in annual commitments since 2011.

The system’s private equity portfolio has a 57 percent exposure to buyouts, a 24 percent exposure to venture capital and a 19 percent exposure to special situations, Verus reported.

The system’s top performing buyouts funds in 2022 included Great Hill V, Great Hill VI and Great Hill VII, Verus said.

Great Hill manages $13.4 billion in assets and focuses on buyouts, growth investments and recapitalizations for mid-market companies across several industries, according to past Buyouts reporting.

San Mateo also completed the sale of interests in three funds in the secondaries market in 2022, according to the presentation. These funds were the 2015 vintage year JLL Partners Fund VII, the 2017 vintage Angeles Equity Partners I and the 2012 vintage New Enterprise Associates 14 fund.

This year, San Mateo committed $20 million to MGG Structured Solutions Fund II, $20 million to Genstar Capital Partners XI and $10 million to Eclipse Fund V, board notes show.