FCERA seeks to up its commitment to PE

The pension fund currently allocates 2.9% to PE, short of its 6% target.

The Fresno County Employees’ Retirement Association has invited Warburg Pincus and Hamilton Lane to present at its board of retirement meeting on 7 October, the association’s assistant retirement administrator Becky Van Wyk told PEI.

The fund is looking to up its level of commitments to private equity. Currently it allocates 2.9 percent of its $4.02 billion of assets under management to private equity, below its target of 6 percent.

“We believe you need to invest about $60 million a year to ramp up to your private equity target over the next couple of years,” Verus CEO Jeffrey MacLean told FCERA at its board meeting on 5 August.

Versus has been advising the fund on its PE investments and educating the fund on fees and carried interest, FCERA retirement administrator Donald C. Kendig told PEI in an email. “Trustees have expressed a desire to know more about fees and carried interest,” Kendig wrote.

During the meeting, MacLean recommended $12 million be committed to Warburg Pincus Private Equity XII. The addition of Warburg Pincus to FCERA’s portfolio will provide the pension fund with “broad-based, deep exposure to private equity without paying a double layer of fees,” he said in reference to fund of funds.

For fund of funds, MacLean recommended Adams Street, Hamilton Lane and HarbourVest. For these there is no full transparency on fees, he informed the fund, noting that each will offer a different fee terms.

The fund has not changed the level of its PE commitments since the last quarterly report from March.

According to the report, the pension fund’s PE portfolio consisted of $245 million in commitments to nine funds, including Landmark Equity XIV from 2008 and New Mountain Partners III from 2007.

Its net IRR for Landmark was the second highest at 17.5 percent, while the highest IRR was from a $20 million commitment to 2002 Blackstone IV at 30 percent.