Los Angeles City Employees' Retirement System approved issuing an RFP for a firm to provide custodial and securities lending services, minutes from a recent meeting show.
The $14.4 billion pension plan could launch the RFP as early as Monday. Incumbent custodian Northern Trust's contract expires on July 31, 2015. Northern Trust has provided LACERS custodial and securities lending services since 1991 and will be invited to rebid. A selection is expected in the first quarter of 2015. The RFP is expected to be posted on LACERS website.
According to the Sept. 9 meeting minutes, the pension fund also terminated a $75.7 million midcap equity strategy managed by New Mountain Vantage Advisers for underperformance and fee concerns.
The assets will be invested with existing manager Principal Global Investors. The fund has been on watch since Aug. 22, 2013. New Mountain charges 1.75% annual management fee plus a 20% incentive fee on net profits compared to a median fee of 69 basis points for a domestic midcap equity manager, a board report noted. Paula Bosco, managing director and chief compliance officer at New Mountain. declined to comment.
LACERS also committed up to $35 million to two private equity funds, materials on the pension fund's website show.
LACERS committed up to $25 million to Polaris Venture Partners VII, which is managed by Polaris Partners. The venture capital fund has a $400 million fundraising target and would invest in early stage and growth stage technology and health-care companies.
LACERS invested $15 million each in the two predecessor Polaris funds.
LACERS also committed up to $10 million to Spark Capital Growth Fund, a venture capital fund with a $400 million target. Spark's new fund would invest in growth stage media and technology companies. LACERS committed to three prior Spark funds: $9 million to Spark Capital, $9.75 million to Spark Capital II and $10 million to Spark Capital III.
The commitments were made by LACERS' private equity consultant Portfolio Advisors, which made the investments under a discretionary mandate.