Sacramento County plans distressed commitments

The $7.4bn retirement system has made two commitments to private debt funds since April. 

The Sacramento County Employees’ Retirement System’s 2014 private equity investment plan calls for commitments to two distressed funds, according to documents released to Private Debt Investor. The commitments will be approximately $35 million in size.

The investment plan was received and filed at SCERS’ retirement board meeting last week. SCERS general counsel Robert Gaumer told Private Debt Investor that a “receive and file” designation functions as the board’s endorsement of the investment plan.

SCERS’ 2014 investment plan allocates approximately $265 million for private equity commitments across a seven to 11 funds. The private equity allocation includes buyouts, venture capital and other strategies.

“SCERS is currently working to close on two additional funds over the next few weeks, and is reviewing several other funds which are scheduled to close over the next several months. Areas of focus for the remainder of 2014 include turnaround buyout funds (particularly software/technology), venture capital, distressed debt and non-U.S. opportunities,” according to a report submitted by SCERS chief investment officer Scott Chan and deputy CIO Steve Davis.

SCERS set a 10 percent target allocation to private equity in 2011. Within that allocation, the $7.4 billion retirement system set a distressed debt sub allocation of up to 20 percent.

The retirement system has made two commitments to private debt funds since April 2013; $40 million to TPG Opportunities Partners III and $35 million to Summit Partners Credit Fund.   

As of 30 September, approximately 21 percent of SCERS private equity commitments were dedicated to debt related strategies, according to meeting materials. SCERS private equity portfolio has netted a 6.73 percent internal rate of return since inception.