Los Angeles City plans up to $350m for PE

The $13.5 billion retirement system has committed $274.7m to distressed debt funds since 1995.  

The Los Angeles City Employees’ Retirement System’s (LACERS) Board of Administration approved a strategic plan that calls for $325 million to $350 million in private equity commitments for the 2014-2015 fiscal year, a spokesperson told Private Debt Investor.

The $13.5 billion retirement system will commit to approximately 12 to 15 funds during that period, with sizes ranging from $10 million to $40 million, according to a Portfolio Advisors presentation included in the board’s 22 April meeting materials. At that commitment pace, LACERS can expect to reach its 12 percent target allocation to private equity in around four years, or one fundraising cycle.

LACERS divvies up its private equity allocation across several investment strategies, with approximately 60 to 75 percent of its commitments dedicated to buyout funds. The retirement system earmarked another 5 to 15 percent for distressed debt funds and as much as 5 percent for mezzanine. The private equity portfolio also includes sub-allocations to secondaries, growth equity, venture capital and special situations.

LACERS has committed roughly $2.8 billion to private equity since it began investing in the strategy in 1995. Distressed debt funds account for $274.7 million of those commitments, which have netted a 12.1 percent internal rate of return through 30 September, according to Portfolio Advisors.  The $25 million LACERS invested in mezzanine vehicles had netted 36.8 percent through the same date.