Fort Lauderdale makes PE debut with $30m in secondaries commitments

The City of Fort Lauderdale General Employees’ Retirement System is investing in secondaries – and private equity – for the first time with a $30 million commitment to three funds managed by HarbourVest Partners, Hamilton Lane and Capital Dynamics, a spokesman for the pension fund has confirmed.

The special board of trustees approved three $10 million commitments to each of the secondaries funds, the pension’s 22 October board minutes show.

The pension’s board felt it was too heavily weighted in public equities, and fixed income was not going to provide good enough returns, a spokesman said, adding this is the first time the pension has invested in private equity.

The funds are HarbourVest‘s Dover Street IX, Hamilton Lane Secondary Opportunities Fund IV and Capital Dynamics Global Secondaries IV, according to the spokesman.

Dover Street IX is Boston-headquartered HarbourVest’s latest dedicated secondaries vehicle. The fund is targeting $3.6 billion, said the spokesman, citing investment documents. Capital for Dover Street IX will most likely be called from the second quarter of 2016, according to the minutes.

Philadelphia-based Hamilton Lane is currently seeking $1.25 billion for Hamilton Lane Secondary Opportunities Fund IV, its fourth dedicated secondaries fund, Secondaries Investor previously reported. The fund, which was registered in the UK in August, has secured at least $91 million in pending commitments, according to an October presentation document to the Fresno County Employees’ Retirement Association.

Hamilton Lane pays on average a 23 percent discount to net asset value (NAV) for stakes it purchases, according to the minutes.

Zug, Switzerland-based Capital Dynamics is currently raising Capital Dynamics Global Secondaries IV, which has a hard-cap of $500 million, according to PEI’s Research and Analytics division. The fund is expected to raise a significant amount of capital from existing investors and to add new investors from the US and Japan, Secondaries Investor reported in 2013.

Capital Dynamics generally targets a 1.6 to 1.8 x multiple with a net return of 15 to 20 percent, according to the minutes.

Fort Lauderdale manages about $618 million on behalf of permanent employees of the Florida city, according to PEI data.