Los Angeles City Employees’ Retirement System committed a total of up to $35 million to three private equity funds, under a discretionary mandate with private equity consultant Portfolio Advisors, said a report for the $14.9 billion pension fund’s board meeting Tuesday.
LACERS committed up to $15 million in DFJ Growth 2016, a growth private equity fund with a $500 million target managed by Draper Fisher Jurvetson. LACERS would pay a 2.5% management fee of total fund commitments during the investment period with a 10% annual reduction after the investment period. There is no hurdle. Carried interest would be 20% for returns up to 1.25 times the aggregate commitments and 25% for returns over 1.25 times the total commitments. LACERS has committed a combined $35 million to two DFJ funds: $25 million to DFJ Growth 2013 and a $10 million commitment to DFJ Venture XII in January.
LACERS also committed up to $10 million each to ABRY Heritage Partners, a small-cap buyout fund with a $525 million target managed by ABRY Partners, and Polaris Partners VIII, a growth private equity fund with a $400 million fundraising target.
The ABRY fund would charge a 2% management fee and 30% carried interest after it earns a 9% minimum return. LACERS has committed a total of $45 million to ABRY funds: $20 million to ABRY Advanced Securities Fund III and $25 million ABRY Partners VIII, both in 2014.
The Polaris fund would charge a management fee of 2% of aggregate commitments in the first year and then 2.5% of total commitments from the second to sixth years during the investment period. Polaris would provide a 10% reduction in management fees after the fund has finished investing. Carried interest would be 20% for returns up to two times the aggregate commitments and 25% for returns more than two times the aggregate commitments. There is no minimum return before Polaris can receive carried interest. LACERS has committed a total of $55 million to the three prior Polaris funds: $15 million to Polaris Venture Partners V, $15 million to Polaris Venture Partners VI and $25 million to Polaris Venture Partners VII.