San Francisco pension approves private market funds, consultant

The $30 billion San Francisco Employees' Retirement System added $260 million to its private market investments with allocations within real estate, credit and venture capital at the tail end of 2020. A total of four firms/funds were selected by the investment team and approved by trustees. They are: Grain Communications Opportunity Fund III; CapRock Partners; Kennedy Lewis Capital Partners II; and Versant series of venture capital funds. Within the $3.7 billion real assets portfolio, Grain Managements’ telecommunications fund and two CapRock funds were selected. Grain Communications Opportunity Fund III was slated to receive up to $75 million, for its global telecommunications infrastructure strategy. This is San Francisco’s second investment with the firm. CapRock Partners Value-Add Industrial Fund will receive $25 million and the CapRock Partners Industrial Co-Investment Fund III was slated to receive $25 million under the real assets umbrella and is the pension fund’s first time investing with the firm. CapRock’s latest strategy is the acquisition of middle market, value-add industrial properties, typically between $20 million to $50 million per acquisition across California, Nevada and Arizona. Kennedy Lewis Capital Partners II is slated to receive up to $60 million as part of a global credit opportunities fund with the San Francisco pension’s private credit portfolio that totals $1.5 billion. Last, but not least, was a $75 million allocation to three venture capital funds – Venture Capital VIII, Versant Voyageurs II and Versant Vantage II. The allocation was approved at a board meeting in October. All told in 2020, San Francisco made roughly $1.9 billion in capital commitments to private markets. This is a dip from what would have been expected in a normal year when commitments would have soared to near $2.5 billion, officials said. The majority of assets went to private equity ($949 million), followed by private credit ($560 million) and then real assets at $390 million. At trustees’ January meeting, Cambridge was renamed consultant within private credit and private equity. The firm has been a consultant in both arenas since 2013. The retirement fund went through an extensive search process reviewing several firms for both consulting arrangements.

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