FROM: Don Pierce, Chief Investment Officer
SUBJECT: Informational: Pathway Manager Update
RECOMMENDATION:
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Pathway Ownership Update.
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BACKGROUND:
Pathway Capital Management manages about $866 million in assets for SBCERA. The focus of the relationship is to make primary commitments, co-investments, and secondary transactions in private equity.
Pathway was founded in 1991 by Douglas Le Bon, James Reinhardt, Karen Jakobi, and Albert Clerc. Mr. Clerc retired from the firm in 2012. The firm’s remaining co-founders, Mr. Le Bon, Mr. Reinhardt, and Mrs. Jakobi, own a meaningful amount of the business despite selling equity to the firm’s other 19 partners over time. Given the desire to find a comprehensive solution to the ownership transition and facilitate future succession planning, Pathway considered several solutions that involved external capital for the first time in its history.
On November 12, 2025, Pathway announced signing a definitive agreement to be fully acquired by Clearlake Capital Group. Headquartered in Santa Monica, Clearlake is a global investment firm focused on private equity, private credit, and liquid credit. The firm was founded in 2006 and has more than $90 billion in assets under management.
Upon the close of the transaction, Pathway’s co-founders will transition to Senior Advisors before fully transitioning out of the business over a six-to-twelve-month period. James Chambliss, Richard Mazer, and Alex Casbolt will continue to manage the day-to-day operations at Pathway. James Chambliss has worked on SBCERA’s accounts for over 20 years, since the inception of the relationship. Bryan Nelson, our primary relationship coverage, has worked on the SBCERA account for over 10 years. We do not expect changes to our coverage team because of the transaction. The investment team and investment decision making will remain independent of Clearlake. Pathway will remain headquartered in Irvine with a global footprint.
Pathway has been an investor in Clearlake funds since 2015. While this relationship has been fruitful, we believe it presents complexity and various degrees of conflicts of interest. Pathway and Clearlake have confirmed that fees will be adjusted such that SBCERA is not paying a layer of fees at both the Pathway level and the Clearlake level. Pathway will continue to cover Clearlake funds and can invest from its platform. While SBCERA maintains discretion over each commitment, Pathway will not show us Clearlake investments unless we explicitly request it. Staff believe Pathway has sufficiently addressed potential conflicts of interest from this transaction.
After several discussions with Pathway, staff is comfortable with this transaction and the mitigants put in place to address potential conflicts of interest. The succession planning question was an overhanging risk consideration for several years and we believe this transaction addresses those concerns. We think the transaction will improve Pathway’s ability to attract and retain top talent and provide opportunities for the firm to grow. Staff will closely monitor for any changes to the investment process, decision making, and drift from the focus of our account.
BUDGET IMPACT:
Investment Costs are deducted from Net Asset Value.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
STAFF CONTACT:
Jacob Abbott
ATTACHMENTS:
Exhibit A: Pathway Presentation
Exhibit B: NEPC Memo