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LACERA closes 2018 secondaries sale of Madison Dearborn stakes

The interests were the last remaining pieces of a blockbuster sale the pension system made to Blackstone's Strategic Partners in 2018.

Los Angeles County Employees Retirement Association closed the sale of its interests in two Madison Dearborn Partners funds to Blackstone’s Strategic Partners unit, according to a document posted on its website.

The transaction closes up a major 2018 secondaries sale as the $58.4 billion pension seeks to re-work its private equity portfolio.

The sold interests were in Madison Dearborn Capital Partners IV and V, the document said.

These two interests were part of a package of 61 fund stakes valued at $805 million that LACERA sold to Strategic Partners in 2018. The other 59 were already transferred to Strategic Partners, but these two were delayed by “regulatory annual quantity transfer restrictions.” The package included $255 million in unfunded commitments, according to sister title Private Equity International.

LACERA did not identify the buyer. Secondaries Investor identified Strategic Partners as the buyer in 2018. Earlier that year, LACERA hired Greenhill Cogent to help arrange the sale, sister publication Buyouts Insider reported.

LACERA committed $25 million to Madison Dearborn Partners IV. The fund had a 2000 vintage year, an internal rate of return of about 14 percent, and an investment multiple of 1.94, according to LACERA documents. The pensions and retirement body committed $75 million to Madison Dearborn Partners V-A. The fund had a 2006 vintage, a 7.17 percent internal rate of return and a 1.6 multiple.

LACERA may be interested in buying interests on the secondaries market as well. The board recently doubled the amount chief investment officer Jonathan Grabel can spend on secondary purchases without board approval from $100 million to $200 million, as Buyouts Insider reported. That change took effect at the beginning of the year.

As of 30 November, LACERA’s fund was valued at $59.6 billion, with $6.1 billion of that in private equity.

Action Items: read the materials for LACERA 8 January 2020 board meeting here.