San Bernardino mulls Kayne Anderson relationship

The US pension is proposing to get into Fund VII through a $10m secondaries transaction and to open an account to invest 'across the platform'.

San Bernardino County Employees’ Retirement Association (SBCERA), a US public pension plan with $8.6 billion in assets according to PEI data, is considering the purchase of a stake in Kayne Anderson Capital Advisors’ seventh energy fund from an “affiliate of the general partner,” according to an agenda item to be discussed by the pension on Tuesday.

SBCERA is proposing to buy a $10 million limited partner commitment to Kayne Anderson Energy Fund VII at its cost of $4.8 million plus assumption of the remaining $5.2 million unfunded commitment.

Kayne Anderson closed Fund VII in October 2016 on its hard-cap of $2 billion, above its initial target of $1.6 billion. At that time the fund was already 40 percent invested. It has a target return of net of fees of 18 percent and 1.8x invested capital.

If approved, the fund stake acquisition would reunite the pension with Michael Levitt, who joined the firm as chief executive last year. Levitt is known to SBCERA; the pension invested in the firm Levitt founded – Stone Tower Capital – in 2008. Stone Tower was subsequently acquired by Apollo Capital Management, of which Levitt was named vice-chairman and to which SBCERA has also committed capital.

SBCERA is “in active discussions with Kayne Anderson to create an MCA [master custodial account] relationship for investments across the Kayne Anderson platform,” according to documents released by the pension.

Kayne Anderson’s strategies span equity and credit investments in energy assets and companies, mid-market companies and real estate. KAEF VII, the fund in which SBCERA is considering buying a stake, invests in mid-market North American oil and gas companies.

SBCERA and Kayne Anderson were both unavailable to comment a press time.