The Dallas Police and Fire Pension System has made two new secondaries sales in February and have stakes in 10 funds that are expected to be sold by the end of March, according to its monthly investment report as of 28 February.
Last month DPFP sold its stake in Oaktree Power Opportunities Fund III for $11.9 million and in Ashmore Global Special Situations Fund IV for $2.07 million, the report showed.
According to the 9 March meeting agenda, DPFP initially committed $30 million to the Oaktree Power Opportunities Fund III and $70 million to Ashmore GSSF IV.
The agenda also showed valuation data as of 30 September, indicating that DPFP’s positions in Oaktree Power Opportunities Fund III and Ashmore GSSF IV were valued at $11.48 million and $5.28 million, respectively. Oaktree Power Opportunities Fund III closed on $750 million in 2011, according to media reports, and targets mid-market buyouts in the energy and power sectors. Ashmore GSSF IV is a 2007-vintage fund that closed on $1.4 billion, according to PEI data.
As of that date, Oaktree Power Opportunities Fund III was generating a 12.5 percent internal rate of return, while Ashmore GSSF IV performed at a loss of 8.47 percent IRR, according to data from its investment consultant, NEPC, for DPFP. It was unclear whether the IRR figures were net or gross of fees.
DPFP said it is also planning to sell its stakes in three private debt funds – Lone Star Funds VII, VIII and IX – and in seven private real estate funds – Lone Star Funds III, IV and VI; Lone Star Real Estate Funds I, II and III; and in London-based M&G Investments’ M&G Real Estate Debt Fund II. The investment report indicated these 10 fund stakes are under contract to be sold, with the expected closing date of on or before 31 March.
The total value of those 10 stakes to be sold was $88.91 million as of 30 September.
Private Equity International reported last month that DPFP realised $160.7 million in cash flows from the secondaries sales of 11 private fund stakes in December and January. Including the sales from February, DPFP has realised $174.67 million – leaving behind $439.23 million in its portfolio up for secondaries sales.
DPFP first announced plans to make secondaries sales of fund stakes from a private investment portfolio worth $613.9 million in December, as reported by sister title Secondaries Investor.
NEPC reiterated in a memo for the 9 March meeting that DPFP has sought to raise cash by ending manager relationships and making asset sales, in anticipation of potential cash flow needs. It added that the need for cash has subsided recently, leaving DPFP with a cash amount above its policy target. But given the uncertainty of future cash needs, NEPC recommended that DPFP hold on to these excess cash assets.
Indeed, DPFP’s cash allocation stood at $353.8 million as of 28 February, representing 16.7 percent of its entire portfolio, above its mere 2 percent target.
The city pension’s private equity portfolio was also overweight, at 15.2 percent, or $321.99 million, above its 5 percent target. This represented a slight reduction year-on-year, from 17.44 percent allocation as of 29 February 2016.
DPFP’s real estate portfolio sat at 27.1 percent, well-above its 12 percent target as of 28 February, and slightly more than its 26 percent allocation a year ago.
On the other hand, private debt was severely underweight, at 2.4 percent, below its 5 percent target as of 28 February. Last year it was at 2.3 percent.