LACERA commits $100m to Palladium

The Los Angeles pension expects to commit about $1.8 billion to private equity this year.

The Los Angeles County Employees Retirement System has committed $100m to Palladium Equity Partners Fund IV, according to documents from the pension’s Wednesday board meeting.

Palladium launched Fund IV in 2012 with an $800 million target. The fund had raised about $332 million as of May 2013, according to a source familiar with the fund. Investors in Fund IV include the California State Teachers’ Retirement System, the Connecticut Retirement Plans and Trust Fund and the New York State Common Retirement Fund, according to Private Equity International’s Research and Analytics division.

Palladium invests between $15 million and $75 million in lower-mid market companies that focus on the Hispanic market. Target businesses typically have earnings before interest, taxes, depreciation and amortisation of between $5 million and $25 million. The firm focuses on the business services, industrial, consumer, healthcare and media sectors, according to its website.

LACERA has a long-term target allocation to private equity of 11 percent and an actual allocation of about 8.6 percent. LACERA expects to reach a 10.2 percent allocation by the end of 2014 and the 11 percent target in 2017, according to board meeting documents.

In order to reach the increased investment pace, LACERA will consider new relationships and secondary private equity fund purchases and sales, while maintaining existing relationships. The fund expects 16 existing managers, such as Madison Dearborn Partners, Vista Equity Partners and First Reserve, to launch new buyout funds in 2014.

LACERA expects to commit $1.8 billion to private equity in 2014, including about $1.3 billion of potential re-ups. The fund invested $1.35 billion to 11 private equity funds and two separate account vehicles last year.

LACERA had $44.3 billion of assets under management as of 31 October. The total fund is expected to grow about 7.5 percent per year.