Los Angeles County Employees Retirement Association hired J.P. Morgan Asset Management at its board meeting Wednesday to manage $300 million over three years in a global discretionary private equity emerging managers separate account.
The board interviewed three finalists that also included Morgan Stanley Alternative Investment Partners and Adams Street Partners. During the meeting, board members discussed the possibility of at some point of bringing the domestic portion of the private equity emerging manager mandate in-house.
The idea of bringing part of the portfolio in-house was first brought up at the time the RFP was launched in March, said Jonathan Grabel, chief investment officer of the $52 billion pension plan, in response to a question during the meeting. Mr. Grabel was hired in April.
"I don't think anyone is ... champing at the bit (to bring the portfolio in-house)" Mr. Grabel said. "I think we recognize it's a significant undertaking."
The board also made three commitments to alternative investment funds on Wednesday, one in open session and two in closed session. The board allocated up to $200 million to AQR Liquid Enhanced Alternative Premia Fund, a hedge fund with an alternative beta strategy managed by AQR Capital Management. LACERA has invested with AQR before.
The board also made an up to $75 million commitment to Sinovation Fund IV, a venture capital fund managed by Sinovation Ventures that has a core strategy of investing in early-stage companies including those in the artificial intelligence and business-to-business arenas. It is a new relationship.
In open session, the board committed up to $50 million to AEW Value Investors Asia III, a value-added real estate fund managed by AEW Capital Management. Real estate consultant Townsend Group assisted.
The board had also committed in closed session at its Nov. 2 meeting $302 million to two alternative funds. LACERA committed up to €150 million ($177 million) in PAI Europe VII, a European buyout fund managed by PAI Partners. This is a new relationship, according to meeting minutes. LACERA committed up to $125 million to Clearlake Capital Partners V, a distressed for control and special situations fund investing in the U.S. middle market managed by Clearlake Capital Group. LACERA has invested with Clearlake Capital in the past, including up to $100 million commitment to Clearlake Capital Partners IV.
Separately, the board launched an RFP for an executive search firm to help recruit a new CEO.
Gregg Rademacher, former CEO of the Pasadena, Calif.-based pension plan retired Oct. 1. Robert R. Hill, assistant executive officer is serving as the interim CEO. Proposals are due Jan. 19 with interviews and a possible selection scheduled for Feb. 15. The RFP is on LACERA's website.
The board also adopted a new asset allocation for its $820 million OPEB master trust of 50% to global equity, 20% each credit and inflation hedge and 10% to risk reduction and mitigation assets. The current allocation consists of an 84% investment in indexed global equities and a 16% investment in the J.P. Morgan Enhanced Cash Portfolio.
The board will implement the new allocation in two stages. It will immediately work with current manager BlackRock to adopt the new asset allocation, investing the money in the firm's index funds. In the second phase, LACERA officials plan to unitize LACERA's existing asset class composites, so that the OPEB trust can invest in the same investment managers as the pension plan. Staff will return to the board at a later time with the plan to unitize the defined benefit composites. General investment consultant Meketa Investment Group assisted
