Sacramento launches secondaries infra FoF

Led by CIO Scott Chan, the $7.6bn pension chose Pantheon to manage its secondaries infrastructure and real assets separate account.

The Sacramento County Employees’ Retirement System (SCERS) has hired private equity firm Pantheon Ventures to manage its Secondary Infrastructure and Real Assets fund, according to a filing with the Securities and Exchange Commission.

The pension system has committed $100 million to the fund of funds, SCERS’ chief investment officer Scott Chan told Secondaries Investor’s sister publication Infrastructure Investor. The fund will focus on secondaries opportunities for infrastructure and energy investments, and SCERS expects to deploy the capital within three to five years.

When asked if the separate account would have a geographic focus, Chan said: “Part of it depends on the type of partnerships that are available in the secondary market –generally those types of assets are global in nature – but I think it’ll be a bit more skewed toward [the] domestic [market].”

Scott Chan
Scott Chan

The fund will invest in multiple funds but may also make direct investments in assets through opportunistic co-investments. As for the energy investments, the mandate covers oil and gas exploration and production, transportation and storage and power, Pantheon confirmed.

SCERS, which has sole and exclusive fiduciary responsibility over the assets of the entire retirement system, has not carved out a separate category for infrastructure. Instead, infrastructure falls under private real assets, which is a subset of real assets, an asset class the pension fund established in late 2011.

In addition to infrastructure, private real assets – which has a target allocation of 6 percent – also includes energy, timber, agriculture and other assets, but there is no specific allocation for each, Chan explained.

“We have been focusing on infra and energy because of the better risk-adjusted returns and opportunities we are finding,” he said.

According to Infrastructure Investor’s Research & Analytics, as of 31 December 2013, SCERS had allocated 21.8 percent of its $7.59 billion investment portfolio to alternative investments with 0.1 percent dedicated to private real assets.

SCERS’ target allocations for alternatives are 10 percent for hedge funds, 15 percent real assets, 10 percent private equity and 0 to 5 percent opportunities.

Pantheon is a fund of funds manager that invests on behalf of over 400 institutional investors, including public and private pension plans, insurance companies, endowments and foundations. Its investment solutions include customised separate account programmes, regional primary fund programmes, secondaries, co-investment and infrastructure programmes.

As of 31 December 2013, Pantheon had over $28 billion in assets under management. In addition to its London headquarters, the firm also has offices in San Francisco, New York and Hong Kong.

Reporting by Kalliope Gourntis