Louisiana Sheriffs' pension says no to private equity

The $1.5bn pension, concerned that GPs were not ‘realistic’ during the buyout boom, will delay an initial allocation to the asset class.

The $1.5 billion Louisiana Sheriffs' Pension and Relief Fund has decided to back off from making a move into private equity as part of its asset allocation strategy. The pension also is delaying making a stronger commitment to real estate.

Louisiana Sheriffs' had been considering moving into the asset class, and even went as far as meeting with advisors for real estate and private equity firms last year, according to Skip McGee, executive director of the pension.

Once the financial markets collapsed last fall, the pension balked on moving into the asset classes, and at this point has no plans to invest in private equity or real estate funds until the markets start to turn around, McGee said.

Conditions in the private equity industry for the past few months have soured the pension’s desire to get into private equity, McGee said.

“If you look at some of the valuations of some of the acquisitions they’ve made and some of the prices they paid, you have to wonder how realistic they were,” McGee said.

The pension will continue watching the market and may decide to re-examine a commitment to private equity and real estate at some point in the future. McGee said he believes the US will start coming out of the recession at the end of 2009.

The pension was started in 1947. It has a target of 55 percent for equities, 40 percent in the US, 15 percent to international and 27 percent in fixed income. McGee said the pension is overweighted in its fixed income allocation, with an actual allocation of 33 percent. The pension also has 3 percent in cash.