SBCERA may cut ties with York Capital Management

The California retirement plan is withdrawing its York investments over unspecified fund terms with which the LP took issue.

The San Bernardino County Employees’ Retirement Association is set to rescind and redeem investments with York Capital Management over an “unfavourable” provision in the relevant vehicles’ governing documents, according to meeting materials from the southern California pension fund.

The investments include a $100 million commitment approved in January to the York Structured Credit Opportunities Fund, which will invest in collateralised loan obligation tranches and warehouses, and a $47.5 million contribution to the York Global Credit Income Fund (GCIF). The SBCERA investment committee is set to vote on the measures at its 10 July meeting.

The $9.87 billion retirement plan’s withdrawal from the GCIF was not due to performance, the meeting materials noted. The vehicle has “more than delivered from an expectations perspective”, but differences over a fund term that SBCERA took issue with were not resolved. The term in question was not disclosed.

“In the due course of negotiating the York Structured Credit Opportunities Fund agreement, staff identified an unfavorable key term to SBCERA in the new fund documents,” July meeting materials read. “A similar term is also present in the current Global Credit Income Fund contract.”

In addition to ending its relationship with York, SBCERA is also planning to terminate its hedge fund investment with Tricadia Capital Management – which also invests from closed-end funds – because of lacklustre performance.

The pension fund submitted its redemption request to Tricadia in mid-2017, a process that will be completed in September. SBCERA currently has $36.2 million with the firm, down from a peak of $80 million. SBCERA will formally vote on the fate of its Tricadia investment at its July meeting.

York and Tricadia declined to comment for the story. SBCERA could immediately be reached for comment.

Last year, SBCERA pulled out of the Alcentra European Direct Lending Fund II over concerns regarding the leverage facility Alcentra planned to use alongside the vehicle’s equity commitments. The limited partner was reviewing the terms of the loan and found one “not meeting SBCERA’s minimum requirements”.