Orange County pension mulls private markets secondaries sale

The system has not yet finalised a contract with a secondaries adviser.

Orange County Employees Retirement System is considering a sale of stakes in private credit funds, along with other private market vehicles, according to pension documents.

The system is considering the sale on an opportunistic basis and is not in need of liquidity, the documents said. OCERS floated a request for proposal last August to hire an adviser to help with the process.

Generally, an LP seller will have identified GPs and funds it wants to sell, and then works with an adviser to refine its offering. The adviser also solicits bids, at which point the seller will weigh whether pricing is at a level at which it will transact.

Investor interest in secondaries credit funds has also grown in recent years as more investors look to increase their private debt exposure, according to a survey from affiliate publication Private Debt Investor.

Orange County is considering selling a portion of its private debt portfolio valued between $100 million and $300 million, according to the RFP.

“We anticipate that the secondary transaction will focus on OCERS’ private credit investment given that it is an asset class that offers the most compelling bids,” investment staff wrote in the RFP.

The system’s private income strategy was valued at $1.07 billion at the end of last year, according to board documents.

The system is open to selling other private assets if it can find attractive pricing, the RFP said.

According to documents from the system’s most recent investment committee meeting, Orange County has not yet finalised a contract with an adviser.

Orange County views a secondaries sale as a “tool for portfolio health” it may wield to increase liquidity, rebalance and to eliminate non-strategic partnerships.

The $22.2 billion system hopes to complete the secondaries sale by the first half of this year, the RFP said.

According to the RFP, Orange County has not participated in any previous secondaries sales.

The system’s private income strategy makes up 4.8 percent of its total fund, below its 5 percent target, as of the end of 2023. This strategy has earned a net internal rate of return of 8.21 percent since its inception in 2023, board documents said.

Orange County’s US private debt assets have a net asset value of $782.3 million, while non-US private credit funds have a market value of $289.5 million, according to board documents.

Orange County’s investment staff did not return questions seeking comment by press time.