FROM: Don Pierce, Chief Investment Officer
SUBJECT: Informational: 2024 Private Equity Pacing Plan Update
RECOMMENDATION:
title
2024 Private Equity Pacing Plan Update.
body
BACKGROUND:
SBCERA Budget Update
SBCERA Board of Retirement approved the 2024 Private Equity (PE) Pacing Plan in January 2024 with a budget of $575 million, an allocation of $275 million to existing MCA relationships, and $300 million of anticipated, but unallocated dry-powder to make investment decisions throughout the year. A breakdown of the PE Pacing Plan is provided in Table 1.
Through June 2024, the investment team has approved 18 transactions committing $176.5 million across primary funds, co-investments, and secondary transactions. More information on this is included in Exhibit A. In addition, the team performed due diligence on the Patria SOF V secondary focused fund and will be looking to commit $75 million at the conclusion of legal due diligence.
Since 2020, the private equity program budget has averaged $590 million with an average yearly commitment of $422 million to PE opportunities. During the same period, SBCERA has received an average of $805 million in distributions including $97 million YTD 2024.
Since inception in 2004, SBCERA’s PE allocation has generated a net 10.78% IRR and 1.62x multiple on $1.7 billion of commitments as of Q3 2023. Performance at the underlying MCA relationships is provided in Table 2.
Table 1: Private Equity Budget and Allocations for 2023-2024
|
Manager Allocations |
2023 |
2024 |
|
Total PE Budget |
$525 MM |
$575 MM |
|
|
|
Base |
YTD Add |
|
Adams Street Partners MCA |
$75 MM |
$75 MM |
- |
|
Industry Ventures MCA |
$100 MM |
$50 MM |
- |
|
Irradiant Partners MCA |
$50 MM |
- |
- |
|
Kayne Anderson MCA |
$25 MM |
- |
- |
|
Partners Group MCA |
$75 MM |
$75 MM |
$7.02 MM |
|
Pathway Capital MCA |
$85.4 MM |
$75 MM |
- |
|
Patria SOF V* |
- |
- |
$75 MM* |
|
Allocated PE Budget |
$410.4 MM |
$275 MM |
$357.02 MM |
|
Unallocated PE Budget |
$114.6 MM |
$300 MM |
$217.98 MM |
*Subject to due diligence completion. Patria acquired Abrdn; SBCERA participates in existing Patria (fka Abrdn/Aberdeen Standard/Standard Life) SOFs I through IV.
Table 2: SBCERA MCA Net Performance as of 12/31/2023:
|
|
Since Inception (net) |
|
|
Manager |
IRR |
Multiple |
DPI |
NAV ($ Million) |
|
Adams Street Partners MCA Fund 1 Inception: 9/2020 |
12.5% |
1.22 |
0.14 |
$150.5 |
|
Adams Street Partners MCA Fund 2 Inception: 9/2023 |
NM |
1.08 |
0.01 |
$17.0 |
|
Ares MCA Inception: 1/2014 |
8.7% |
2.61 |
0.62 |
$722.1 |
|
Industry Ventures MCA Inception: 9/2013 |
18.6% |
1.80 |
0.60 |
$495.4 |
|
Kayne Anderson MCA Inception: 9/2017 |
12.1% |
1.31 |
0.79 |
$361.3 |
|
Partners Group MCA Inception: 6/2013 |
12.0% |
1.47 |
0.53 |
$627.8 |
|
Pathway Capital MCA Inception: 3/2014 |
20.3% |
1.7 |
0.70 |
$656.4 |
|
Waterfall MCA Inception:11/2018 |
17.11% |
1.72 |
1.28 |
$30.5 |
COMMITTEE REVIEW:
This item was reviewed by the Investment Committee at its meeting on July 18, 2024.
BUDGET IMPACT:
None.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
STAFF CONTACT:
Amit Thanki
ATTACHMENTS:
Exhibit A: 2024 PE MCA Deal Flow (first half)
Exhibit B: Historical PE Budget Allocation