San Diego City hikes private equity allocation

The pension system launched its private equity programme in 2009 and has committed about $600m so far.

The San Diego City Employees’ Retirement System has ramped up its allocation target to private equity from 5 percent to 10 percent, according to documents from the pension system. 

SDCERS’ board of administration approved the allocation hike Tuesday. The system launched its private equity programme in 2009 and the portfolio had a current allocation of about 4 percent as of 31 December, 2012, the documents said. SDCERS works with two consultants on private equity – Credit Suisse and StepStone Group.

“While history is short, initial results have been favourable both from a qualitative and quantitative standpoint,” said Hewitt Ennisknupp, the system’s general investment consultant. 

SDCERS had committed $600 million to private equity fund managers since inception of the programme, with about $178.6 million called, the documents said, citing information as of 31 December, 2012. The system had received $33.2 million in distributions as of the same date. 

So far, the system’s private equity programme has generated a 1.29x multiple and a 19.8 percent internal rate of return as of inception, the documents said. 

Managers in the portfolio include Siris Partners II, to which the system committed $15 million in the fourth quarter. Siris closed on $641 million earlier this year. Other managers include HighBAR Partners, Denham Capital, Clearlake Capital Partners, TPG and Avista Capital Partners.