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Contra Costa County chooses StepStone to consult on private markets, build credit portfolio

The $7.6 billion Contra Costa Employees' Retirement Association, Concord, Calif., hired StepStone Group as private markets consultant, overseeing its private equity portfolio and build an expanded private credit portfolio that would increase those investments to 12% from 2% of the portfolio.

CEO Gail Strohl said in an email that the retirement board voted on April 26 to hire StepStone for private equity advisory services to be implemented on a non-discretionary basis and for private credit advisory and investment management services to be implemented on a discretionary basis.

Ms. Strohl said the previous oversight of the private equity portfolio was handled by the system's general consultant, Verus.

Board documents show that StepStone has been charged with building from the ”ground up” a private market credit portfolio in a fund-of-one structure at the annual fee of $1.5 million plus 40 basis points on any co-investments. The portfolio excludes private equity.

The target allocation for private credit is approximately $1.2 billion, a major boost from the $147.9 million in private credit investments as of March 31, shows system data.

The system has $768.6 million invested in private equity, or about 10% of assets, short of its 12% target. StepStone will be paid $500,000 annually to provide consulting services on that portfolio, show the board documents.

The pension fund is in the midst of revamping its entire portfolio as part of a plan to diversity risk away from traditional assets and build downside protection in the event of market downturns. It had more than $3.5 billion of its assets invested in domestic and international equities as of March 31.