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Los Angeles pension hires for $1bn loan mandate

The $59 billion Los Angeles County Employees’ Retirement Association (LACERA) in California has finished up the search for a syndicated bank loan investment specialist that it began last spring.

Credit Suisse Asset Management beat out 38 other contenders for the $1 billion illiquid credit mandate, confirmed Jonathan Grabel, CIO for the retirement system, which currently has roughly $916 million in the asset class.

A wide variety of firms participated in the search including giants such as BlackRock, GSO Capital, Oaktree Capital Management and Goldman Sachs, according to January board meeting materials.

With the new mandate, the system’s 3% target allocation to the space will be met.

The Credit Suisse commitment follows approval for up to $500 million to be allocated to Napier Park Global Capital to manage a portfolio of illiquid credit assets in a single-investor separate account structure, according to December board meeting minutes.

It has been an active few months within the system’s alternative investment programs. Late last year, LACERA trustees approved a $60 million commitment to Revelstoke Capital Partners Single Asset Fund I. Revelstoke in December raised $1.4 billion in committed capital in its two main funds. The private equity firm invests in healthcare and related business services sectors.

A $75 million LACERA commitment was approved in December to Wynnchurch Capital Partners V, which is a value-based middle market buyout strategy focused on equity and debt investments of companies based in the U.S. and Canada.

Separately, staffers did an add-on investment to private equity offering MBK Partners Fund V totaling $150 million. The allocation was authorized by Grabel and the fund targets buyout investments in South Korea, Japan and Greater China.

But this year is still shaping up to be a busy one for LACERA, which is collecting in coming weeks RFPs for a dedicated managed account provider in the area of emerging manager hedge funds. Firms would source, conduct due diligence on and manage the portfolio.

The definition of an emerging manager hedge fund according to LACERA is a fund being less than three years old and having less than $1 billion in assets under management. Also, principals of the firm must always hold at least 66% of the ownership interest of the company.

The deadline for responses is February 14 for the $200 million mandate.

Ultimately though the pension system expects the use of the platform to encompass existing and future investments across various investment categories that include hedge funds and credit strategies. Use of the platform will depend on the benefits afforded with the DMA structure, officials said in a statement to possible respondents.

The benchmark for the hedge fund portfolio is the FTSE 3-Month U.S. T-bill Index plus 250 basis points.

The search is being conducted by LACERA staff and is expected to be wrapped up in the third or fourth quarter.


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