Los Angeles County Employees Retirement Association's board approved two searches Wednesday. One is for a $400 million private equity emerging manager discretionary separate account and the other for an up to $500 million global equity emerging manager portfolio, CIO Jonathan Grabel said in an email.
The $69.6 billion Pasadena, Calif.-based pension plan board issued the RFP because its current discretionary separate account manager, J.P. Morgan Private Equity Group, estimates the program will be without capital to commit to private equity emerging managers, prior to the end of the second quarter of 2022.
J.P. Morgan will be invited to rebid.
LACERA's private equity emerging manager target is 7% of the net asset value of its private equity portfolio. Its $375 million emerging manager portfolio represents about 5% of its the private equity portfolio's $8.9 billion net asset value.
Pension officials are expected to launch the RFP by June 21, with finalists recommended to the board in February.
The board also approved an RFP for a proposed global equity emerging manager as a result of a November structure review of its growth asset class. The allocation size could increase the equity emerging market program to 3% of its $25.8 billion global equity portfolio. Currently, 0.9% of the portfolio is invested with emerging managers.
Staff plans to conduct searches for global equity emerging managers every two years, to bring its global equity emerging manager portfolio closer to its 5% allocation, according to a memo to the board.
The RFP is expected to be launched by June 21 with recommendations of up to three managers to the board in December.
Meketa Investment Group assisted.
Both RFPs will be posted on LACERA's website.
Separately, Mr. Grabel notified the board in another memo that on May 13, State Street Bank and Trust told LACERA officials that the bank had entered into a deferred prosecution agreement with the Department of Justice to resolve overcharging clients for expenses from 1998 to 2015. State Street incorrectly charged clients certain costs labeled "out-of-pocket" expenses on client invoices.
State Street's deferred prosecution agreement with the DOJ includes a $115 million criminal penalty
State Street had notified LACERA that it could have been overbilled and in 2016, LACERA officials determined that LACERA had not been affected.
"Despite there being no financial impact on LACERA, State Street's admission to overcharging clients is concerning," Mr. Grabel said. Staff will monitor further developments.
Staff is also expected to ask the board to approve a possible custody search in the fourth quarter.
