Los Angeles County Employees Retirement Association’s giant secondaries sale last year brought the $56.6 billion pension system’s general partner relationships down from 107 to 78.
LACERA sold interests in 61 funds as part of its $1 billion secondaries sale to Strategic Partners that closed in December.
Greenhill Cogent, LACERA’s secondaries advisor, recommended it split the potential $1.1 billion sale assets into two portfolios, sister publication Secondaries Investor reported last summer. The main portfolio would hold stakes in 37 buyout funds, six distressed funds and two funds of funds/secondaries/co-investment vehicles. The second portfolio would hold 44 small and tail-end funds worth $55 million.
LACERA’s final secondaries sale had a net asset value of $805 million and unfunded commitments of $255 million spread across 61 funds, according to LACERA documents. It is unclear whether the final sale was one transaction or two.
The portfolio included 39 buyout funds with a market value of $655.5 million, 15 venture/growth funds with a market value of $12.6 million, two funds of funds with a market value of $63.2 million and five special situations funds with a market value of $73.4 million.
The 10 largest funds sold accounted for $648 million, or 61 percent, of the total secondaries sale. The portfolio also included seven European interests representing $165.7 million, or 21 percent, of the portfolio. The average weighted vintage was 2009.
The secondaries sale process took six months to close after LACERA engaged Greenhill in July 2018.
Greenhill contacted 73 prospective buyers for the sale, of which 17 declined to participate, 21 submitted first-round bids, four submitted second-round bids and Strategic Partners closed the final bid.
LACERA’s portfolio, after the sale, comprises 73 buyout funds, 50 venture/growth funds, 17 special situations funds and eight funds of funds.
The pension system committed $250 million across four funds earlier this year, which included $50 million to BRV Aster Fund III, $25 million to BRV Aster Opportunity Fund II, $75 million to Vinci Capital Partners Fund III and $100 million to Advent International’s ninth fund.
LACERA’s $5.4 billion private equity portfolio is its best performing investment strategy, generating a net internal rate of return of 16 percent since inception in 1986, LACERA’s 10 April meeting documents showed. While US co-investments are managed in-house, international co-investments are managed by Morgan Stanley and the emerging manager programme is managed by JP Morgan.
LACERA’s private equity allocation stood at 11.3 percent of the total portfolio on 31 December. It returned 19.2 percent over one year, 14.8 percent over three years, 14.9 percent over five years and 13.1 percent over 10 years as of 31 December.