LACERA plans to release private equity carry data

The pension plan expects that the mining process, which begun in August and is being overseen by an external auditor, will be completed by June.

The Los Angeles County Employees’ Retirement Association is in the midst of auditing its private equity-related carried interest data for the first time.

The $48 billion pension fund, which allocated 9.4 percent to private equity as of 30 June, hired Philadelphia-based accountant Kreischer Miller (KM) in August to retroactively calculate private equity carried interest in addition to management fees, according to LACERA audit committee's materials for its Wednesday meeting. The audit process is about 50 percent complete and is expected to be finished by June, the materials showed.

LACERA’s financial report for the fiscal year ended 30 June indicated the pension paid $52.6 million in management fees in private equity, up 18 percent from the prior fiscal year. The fees did not include carried interest and the review from KM.

The California pension’s carried interest analysis follows similar efforts made by various US public pension funds in recent months. The California Public Employees’ Retirement System – the largest pension in the US – released its first-ever report on its profit-sharing data in November 2015, as reported by Private Equity International. Another prominent US pension, the Massachusetts Pension Reserves Investment Management Board, released its carry data in December for its first time, as reported by PEI.

LACERA hired KM after running a request for proposals process in September 2015 for two separate activities, which included the retrospective audit, and ongoing fee and carried interest analysis, the materials showed.

The audit committee's agenda for its July meeting indicated LACERA received eight proposals in the RFP process for the retrospective engagement and six for the ongoing one. The board had to approve an increase in the contract fee limits, as most proposals quoted costs in excess of the $75,000 that was initially authorised.

LACERA received the eight proposals from KM, FTI Consulting, LP Capital Advisors, Meketa Investment Group, Maples Fund Services, PEF Services, Conifer Financial Services and Real Estate Fiduciary Services, according to LACERA’s operations oversight committee agenda for its January 2016 meeting, before ultimately selecting KM.

It is unclear how far back KM is going in its study of past performance fees paid by LACERA, or who LACERA selected for its ongoing analysis.

Information about KM’s contract fees was not available. LACERA could not be reached for comment.