OCERS seeks advisors for $300m mandate

Orange County Employees Retirement System (OCERS) wants to hire private equity fund of funds managers to help it invest $150 million over each of the next two years and is interested in secondaries.

Managers can make proposals for either discretionary managed accounts or a fund of funds portfolio. OCERS is also inviting proposals for a fund to invest solely in California-based industrial and technological innovation.

The pension fund aims to simplify its portfolio structure and achieve better pricing by hiring up to two discretionary advisors or managers, and wants to attract major players with strong market access to top quartile GPs, according to a request for proposals (RFP) issued on 28 October.

Any managers proposing secondaries investments must outline their strategy, how it is likely to change over the next three years, their investment rationale and whether their fees for secondaries differ from other strategies.

OCERS found it paid dramatically less fees on private equity fund of funds after it hired Pantheon in 2013 as a customised account manager and wants to achieve a similar outcome again, according to the RFP. The pension pays about 35 basis points on deployed capital with no carried interest for such primaries accounts with Pantheon.

The pension has also committed capital to managers who have authority to acquire fund stakes opportunistically at attractive prices during “a recessionary environment”, the RFP states.

Interested managers must meet 15 requirements, including having more than $5 billion in assets under management, at least two US public pension clients who have total portfolio assets of more than $10 billion and  at least five years of experience offering funds, accounts or product structures in line with the proposal.

The deadline for submissions is 5 January.

Private equity investments made by US pension funds significantly outperform those made in other asset classes, according to an October report from the American Investment Council, as reported by sister publication pfm.

OCERS has committed $1.8 billion to private equity since 1985 and has $12.5 billion in assets under management.