Ventura County jacks PE commitment as it lays out plan for more exposure

Ventura County Employees Retirement Association plans to commit $275 million in 2022 and an average of $357 million for the following five years after its board voted to raise its target allocation to private markets by 2 percent.

As public pensions continue to see strong returns from their private equity portfolios, despite volatility in the public markets, many institutional investors are planning to either maintain or increase their exposure to the asset class. Ventura County increased its private equity target to 18 percent from 16 percent. In a presentation to board members, consultant Abbott Capital said the county’s private equity investments earned a 35.6 percent return over the past year.

“Private equity enjoyed strong performance in 2021, despite the ever-changing environment. Fundraising and investment activity, and particularly exit activity, remained robust across all segments. Overall, the asset class continues to benefit from a long-running favorable market and performance remained consistently positive,” wrote Ventura County chief investment officer Dan Gallagher in the 2022 Private Equity Annual Plan written in conjunction with Abbott Capital.

The board also voted to increase its target to private debt to 8 percent from 6 percent. To balance the shift, the board also voted to reduce its holdings in global and emerging market equities and various bond categories.

“We’re in a world where core asset classes don’t get the types of returns needed. We’re in a period where diversification really helps,” said Allan Martin, a partner at consultant NEPC, which also helped develop Ventura County’s asset allocation.

The annual plan also revealed some details about Ventura County’s private equity pipeline. Abbott said it expects to source between eight to 10 commitments for Ventura County this year after already making 10 through the first quarter.

Ventura County’s largest investment so far in 2021 was a $50.5 million commitment to Buenaventure One, a fund-of-one it created in 2018 that Abbott manages.

Ventura County has also made a $25 million commitment to Great Hill Equity Partners VIII, a $20 million commitment to Clearlake Capital Partners VII, a $20 million commitment to the Genstar X & Opportunities Fund and a $10 million commitment to Oak HC/FT Partners IV, among others.

Abbott said it identified 19 potential investments in venture capital and growth equity funds, 27 North American buyouts and special situations funds and 10 international buyouts and special situations funds. Due diligence has not yet been performed on these deals, according to the annual report.

With $8.1 billion in total assets under management, Ventura County’s private equity portfolio has $1.1 billion in net asset value, according to the presentation. Ventura County has a $335.2 million exposure to venture capital and growth equity, a $539 million exposure to North American buyouts, a $277.4 million to international buyouts and $690 million to secondaries and co-investments.

Ventura County expects it will commit $325 million to private equity in 2023, $375 million in 2024 and 2025, $433 million in 2026 before eventually reaching $600 million in commitments in 2030.

The 2022 annual plan also projects that by the year 2026 it will have 20 percent exposure to venture capital and growth equity, 35 percent to North American buyouts and special situations, 16 percent to international buyouts and special situations and 30 percent to secondaries and co-investments.

According to the presentation, Abbott largely sources direct funding opportunities while Ventura County largely sources secondaries and co-investments.