Ventura County Employees’ Retirement Association saw distributions from private equity fall by more than half in 2022 compared with the year before.
An exit market slowdown is starting to crimp investors, especially as many are also overexposed to private equity due to the denominator effect. Slowing distributions leave pension systems and other LPs with less capital to commit to new funds, which has lessened fundraising activity.
According to a presentation from consultant Abbott Capital included in documents as part of the $7.8 billion system’s board meeting held on March 27, Ventura County reported it had a negative cashflow of $108 million from its private equity portfolio in 2022, driven by a 51 percent reduction in distributions from 2021.
Buyouts watched a broadcast of the meeting and reviewed the board documents.
“We expect to see a similar slowdown in fundraising, a weaker investment pace, and lower distributions and values than the last several years,” Abbott wrote in the presentation.
Ventura County also approved Abbott’s recommended private equity pacing plan that would see the system reduce its commitments to $235 million. In 2022 Ventura County closed on $283 million in commitments, above its target of $275 million.
According to the presentation, the reduction in pacing is due to the denominator effect. Ventura County’s current allocation to private equity is just under its 18 percent target.
Reducing the pace will allow the system to continue to keep near this level, according to the presentation.
The pacing plan calls for $225 million in commitments in 2024. However, that would incrementally ramp up over the next decade before reaching $475 million in planned commitments by 2030, the presentation said.
According to the presentation, Abbott has already sourced four commitments on behalf of Ventura County this year.
The four announced commitments are:
• $20 million to Charlesbank Technology Opportunities II
• $20 million to GTCR XIV
• $20 million to Hellman & Friedman XI
• $20 million to Parthenon VII