Los Angeles City Employees’ Retirement System is following in the footsteps of its Californian pension neighbour by exploring a secondaries sale.
The pension is considering a portfolio disposal as a way to reduce its number of general partner relationships and monetise legacy assets, according to a presentation prepared by advisor TorreyCove Capital Partners for LACERS’ 23 October investment committee meeting.
A secondaries sale is listed as one of TorreyCove’s five investment recommendations for 2019, the presentation showed.
A possible secondaries sale is part of a strategic plan put together by TorreyCove. The staff of LACERS has recommended its adoption, according to a memo attached to the presentation. It is not clear if the proposal has been approved.
LACERS has $1.7 billion-worth of private equity assets under management, equivalent to around 10 percent of total assets as of the end of June. As of August it had 254 GP relationships, 186 of which were active, the presentation noted. It invested a cumulative $1.37 billion in private equity between 2001 and 2009.
LACERS’ private equity portfolio has achieved a net internal rate of return of 9 percent over the last 10 years, against 8.6 percent for the wider private equity asset class, based on data from the American Investment Council cited in the presentation.
The $16.7 billion pension is the latest in a succession of US pension funds to explore a sale on the secondaries market, including neighbour Los Angeles County Employees’ Retirement Association. In February, the pension said it was exploring options to offload around $1.4 billion of private equity stakes. LACERA has around $5 billion of private equity assets.
LP positions accounted for 63 percent of the $32 billion in deal volume in the first half of this year, according to Evercore’s H1 2018 Secondary Market Survey Results.