Emerging markets special: why LACERA does EM

The Los Angeles County Employees’ Retirement Association is exploring increasing its activities in emerging markets, and hopes to start primary fund relationships in Asia, Latin America, and potentially Africa in the next 12 to 18 months, its private equity team says.

The pension currently works with four EM markets managers: $220 million invested with North Asia-focused MBK Partners; $175 million with GGV Capital, which invests in the US and China; $40 million with Lilly Asia Ventures; and $125 million with Australis Partners, which targets Colombia, Mexico, Chile and Peru; for a total of $560 million.

As of 30 June, LACERA’s actual EM exposure is $340 million, almost 7 percent of the total private equity net asset value of $5.1 billion. This is based on underlying portfolio company domicile, and includes companies of managers with a global mandate.

LACERA said in May 2016 it planned to establish new relationships with EM fund managers. At the time, its exposure to emerging markets was $188 million, or 4.3 percent of private equity NAV.

At a board meeting in January, StepStone outlined private equity opportunities in emerging markets and how to access these markets. LACERA’s 2017 private equity investment plan had a target allocation to non-US private investments of 20-45 percent.

StepStone’s presentation highlights robust growth rates and low levels of private equity penetration across emerging markets, as well as strong performance, particularly in Asia.