FROM: Don Pierce, Chief Investment Officer
SUBJECT: 2026 Private Equity Pacing Plan
RECOMMENDATION:
title
Recommend that the Board approve the 2026 Private Equity Pacing Plan.
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BACKGROUND:
The annual pacing plan exercise is a market standard approach adopted by institutional investors to achieve better allocation results from private market investments. The exercise serves three main purposes:
1. Identify a specific dollar target that can be deployed into private markets like private equity and real estate.
2. Provide for a consistent and calculated deployment pace.
3. Prevent unintended consequences of over allocation or forced selling due to liquidity constraints.
SBCERA Budget Update & Highlights
Private Equity (“PE”) target allocation is 18%. As of September 30, 2025, PE NAV is 17.3% or $2.94 billion of $17.1 billion portfolio NAV. For the 2026 calendar year, NEPC has identified a PE deployment budget of $735 million to ensure allocation target is maintained. The 2026 PE budget is 11.6% greater than 2025 and is largely due to the growth in SBCERA AUM, conservative deployment of prior year budgets, and distributions during the year. For 2026, SBCERA’s MCA relationships will receive 42.8% or $315 million of the budget with the balance available as dry-powder for new opportunities with existing or new relationships. A breakdown of the PE Pacing Plan is provided in Table 1.
The private equity program budget has averaged $600 million with an average yearly deployment of $362.2 million to PE opportunities over the past 5 years. Cash distribution from Q1 2021 to Q3 2025, has averaged monthly distribution of $29.7 million including year-to-date distributions of $208.8 million through Q3 2025. Since inception in 2004, SBCERA’s PE allocation has generated a net 10.54% IRR and 1.61x multiple on $5.05 billion of commitments as of Q4 2024. Performance at the underlying MCA relationships is provided in Table 2.
Table 1: Private Equity Budget and Allocations for 2024-2026
|
Manager Allocations |
2024 |
2025 |
2026 |
|
Total PE Budget |
$575 MM |
$650 MM |
$735 MM |
|
|
|
|
|
|
Adams Street Partners MCA |
$75 MM |
$75 MM |
$50 MM |
|
Adams Street Partners Headwaters Fund |
- |
$65 MM |
$65 MM |
|
Industry Ventures MCA |
$50 MM |
$50 MM |
$50 MM |
|
Irradiant Partners MCA |
- |
- |
- |
|
Kayne Anderson MCA |
- |
- |
- |
|
Partners Group MCA |
$75 MM |
$225 MM |
$75 MM |
|
Pathway Capital MCA |
$100 MM |
$75 MM |
$75 MM |
|
Patria SOF V |
$75 MM |
$25 MM |
- |
|
Allocated PE Budget |
$375 MM |
$601 MM |
$315 MM |
|
Unallocated PE Budget |
$200 MM |
$49 MM |
$420 MM |
Table 2: SBCERA MCA Net Performance as of 06/30/2025:
|
|
Since Inception (net) |
|
|
Manager |
IRR |
Multiple |
DPI |
NAV ($ Million) |
|
Adams Street Partners MCA Fund 1 Inception: 9/2020 |
14.7% |
1.46 |
0.27 |
$170.95 |
|
Adams Street Partners MCA Fund 2 Inception: 9/2023 |
28.1% |
1.36 |
0.00 |
$61.25 |
|
Ares MCA Inception: 1/2014 |
8.7% |
2.86 |
0.96 |
$689.24 |
|
Industry Ventures MCA Inception: 9/2013 |
16.8% |
1.70 |
0.63 |
$858.89 |
|
Kayne Anderson MCA Inception: 9/2017 |
12.4% |
1.36 |
0.69 |
$454.64 |
|
Partners Group MCA Inception: 6/2013 |
14.5% |
1.58 |
0.60 |
$566.57 |
|
Pathway Capital MCA Inception: 3/2014 |
17.8% |
1.7 |
0.70 |
$734.70 |
|
Waterfall MCA Inception:11/2018 |
17.1% |
1.83 |
1.27 |
$38.89 |
BUDGET IMPACT:
Investment Costs are deducted from Net Asset Value.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
STAFF CONTACT:
Amit Thanki
ATTACHMENTS:
Exhibit A: YTD 2025 Private Equity MCA Deal Flow
Exhibit B: NEPC 2026 Private Equity Pacing Plan