Tulare County plans three-to-five PE commitments in 2024

Tulare County Employees’ Retirement System Association plans to commit $58 million annually to private equity as it looks to reach its 12 percent target allocation.

Amid a general slowing of private equity pacing among many large public pension systems, Tulare County has been ramping its exposure. The California system in 2021 hiked its target allocation to private equity to 12 percent from 5 percent, forcing it to ramp up its portfolio.

Verus, which manages Tulare County’s private equity program, presented the pacing plan at the $1.8 billion system’s November 15 board meeting. Buyouts watched a broadcast of the meeting.

The system currently allocates 7.5 percent of its total fund to private equity, according to board documents.

According to Verus, the system will target $58 million in annual commitments from 2024 to 2030, with $40 million towards buyouts managers and $18 million to venture capital funds. Tulare County plans on making between three to five commitments per year.

This will require Tulare County to expand its roster of managers, according to Faraz Shooshani, a managing director at Verus.

“The number of names will grow,” Shooshani said.

Under this pacing plan, Tulare County will reach its 12 percent target by 2027, according to the presentation.

The system will also turn cashflow positive by 2028, where it projects receiving more than $70 million in distributions, Verus said.

According to the presentation, Verus has made $109 million in commitments since it assumed discretionary management of the system’s private equity portfolio in 2022.

The system made commitments to Gridiron Capital Fund V, CD&R XII, Audax Private Equity Fund VII, Charlesbank Technology Opportunities Fund II and Eclipse Fund V this year, according to Verus.

Verus began to manage Tulare County’s private equity portfolio in 2022, shifting its focus to making direct investments in buyouts and venture capital funds.

Previous to that, Tulare County largely invested in funds of funds, with most of its allocation going to vehicles managed by Pathway.

Tulare County’s legacy portfolio also contains three Ocean Avenue buyouts funds and a StepStone secondaries fund, according to the presentation.

According to Verus, Tulare County’s legacy portfolio has generated $140.4 million in distributions against $166.2 million in contributions, with a net IRR of 11.4 percent.