FROM: Don Pierce, Chief Investment Officer
SUBJECT: 2020 Private Equity Pacing Plan
RECOMMENDATION:
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Approve the 2020 Private Equity Pacing Plan.
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BACKGROUND:
The SBCERA Investment Team and NEPC review the Private Equity program annually to ensure the program continues to meet SBCERA's allocation objectives. For the 2020 calendar year, staff is recommending a PE budget of $600 million. This budget will allow SBCERA to continue deploying capital in private assets at a measured pace while maintaining the Investment Policy target of 16% allocation to the strategy.
The 2020 PE budget includes allocations to a new MCA account, new fund commitment, and a re-up for Crestline Portfolio Financing Fund II. Existing MCA relationships are allocated $245 million in the proposed budget leaving $155 million as dry-powder for future opportunities. Please refer to Exhibit 1 for a breakdown of the allocations.
Exhibit 1: Private Equity Budget and Allocations for 2020
Manager
2019 Allocations
2020 Allocations
Total PE Budget
$500 MM
$600 MM
Adams Street Partners MCA1
-
$50 MM
New Fund Commitment*
-
$50 MM
Ares MCA
$15 MM
-
Crestline Portfolio Fin. Fund II+
-
$100 MM
Gramercy MCA
$25 MM
$25 MM
Industry Ventures MCA
$100 MM
$50 MM
Kayne Anderson MCA
$100 MM
$50 MM
Partners Group MCA
-
$50 MM
Pathway Capital MCA
$102 MM
$70 MM
Tennenbaum MCA
$30 MM
-
Waterfall MCA
-
-
Allocated PE Budget
$372 MM
$445 MM
Unallocated PE Budget
$128 MM
$155 MM
1MCA subject to SBCERA Investment Committee and Board approval.
*Quarter 1 potential investment.
+Follow-on fund commitment plus reserve for potential MCA.
Crestline Portfolio Finance Fund II (or "Fund II"):
SBCERA committed $50 million in February 2018 to Crestline Portfolio Finance Fund (or "Fund I"). Fund II will be similar to Fund I from an investment objective, expected returns, and terms perspective. Investor-friendly terms include fees on invested capital and performance fees at the fund level (vs. deal-by-deal ...
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