The Fresno County Employees’ Retirement Association, a US pension fund, has increased its private equity allocation by $110 million (€81.6 million).
Minutes from the Californian pension fund’s meeting on July 18 reveal it agreed a $70 million contribution to the fund of funds of gatekeeper Hamilton Lane, while making further commitments to buyout firms Warburg Pincus and New Mountain Capital, of $25 million and $15 million respectively.
The key decision was FCERA’s fund of funds allocation, with Hamilton Lane competing against rivals HarbourVest Partners and Portfolio Advisors for the mandate.
HarbourVest senior managing director Kevin Delbridge led his firm’s pitch, with managing directors Paul Crotty and Brian Murphy arguing Portfolio’s case. However, both lost out to Hamilton Lane – represented by chief investment officer Erik Hirsch – with the trustees voting unanimously to approve a $70 million commitment to Hamilton Lane Fund VI.
At least one of the trustees withdrew from the voting on the grounds that they were not sufficiently familiar with the three candidates, highlighting the difficulties that can be involved when pension funds look to increase their allocations to a relatively unfamiliar asset class.
The trustees also agreed to commit an additional $25 million to Warburg Pincus’s tenth fund. FCERA has already committed $45 million to two funds managed by the firm, which according to its representative Roseanne Zimmerman “is consistently in the top quartile in internal rate of return.”
The other beneficiary was New Mountain Capital. Managing director Michael Flaherman told trustees that the his firm’s first fund, which received a $25 million commitment from FCERA, currently boasted a 63.6% gross internal rate of return for companies it has sold. The board agreed to commit a further $15 million to the US group’s third fund.
The discussion was led by Jeffrey MacLean from investment consultant Wurts & Associates, FCERA’s appointed adviser.