Los Angeles City Employees' Retirement System committed up to $175 million to six private equity funds, according to notifications to the $19 billion pension fund board.
LACERS committed a total of $60 million to three funds managed by Thoma Bravo, including up to $30 million to Thoma Bravo Fund XIV, which invests in large buyouts of software companies and technology-enabled businesses; up to $20 million to Thoma Bravo Discover Fund III, focused on upper-middle-market buyouts in the same sectors; and up to $10 million in Thoma Bravo Explore Fund, which looks for buyout opportunities in lower-middle-market software and technology-enabled companies. Thoma Bravo is an existing manager.
Pension fund officials also committed up to €46 million ($54 million) to CVC Capital Partners VIII, investing in large buyouts in Europe and North America. CVC Capital Partners is an existing relationship.
LACERS committed up to €35 million to Vitruvian Investment Partnership IV, a growth fund focused on technology and tech-enabled companies mostly in Europe.
A portion of the fund managed by Vitruvian Partners may invest in companies outside of Europe. Vitruvian is a new manager for LACERS.
LACERS also committed up to $20 million to OceanSound Partners Fund, a private equity fund investing primarily in government technology, communications, industrial technology and enterprise information technology sectors. OceanSound Partners is a new relationship.
Separately, the board voted Tuesday to terminate Aegon USA Investment Management’s contract for a $370 million active U.S. high-yield fixed-income portfolio.
In 2019, Aegon rebid for its high yield fixed-income mandate as part of an RFP. Aegon was selected as one of three semifinalists, but the firm was not selected as one of the two finalists. The LACERS board in February selected Loomis Sayles & Co. and DDJ Capital Management. Also in February, the board extended Aegon’s contract for one year to maintain its high-yield exposure while the staff was finalizing the finalist managers’ contracts. The staff is asking the board to terminate Aegon now to give the 30-day notice required by its contract with LACERS.
Funding for the Loomis Sayles and DDJ mandates of $235 million each will come from Aegon’s portfolio, with the remaining $100 million coming from a State Street Global Advisors passive bond fund.
The board also changed its investment policy statement to expand its definition of core real estate to include high-quality, non-traditional niche properties such as student housing, medical office, and self-storage that produce stable income with low risk.