Los Angeles Fire & Police Pensions board committed a total of up to $65 million to two private equity funds, according to a closed session report.
Officials of the $33 billion pension fund committed up to $50 million to North American buyout fund Searchlight Capital IV and up to $15 million to B2B-focused early-stage fund Fika Ventures IV.
Separately, the pension fund is targeting total private equity commitments of $800 million with a range of $750 million to $850 million in 2025, which is the same commitment pace as 2024. Los Angeles Fire & Police has committed a total of $460 million this year through Aug. 15. It has a $5.5 billion private equity portfolio, amounting to 17.6% of total plan assets, exceeding its 15% target allocation but below the top of its target allocation range of 18.75%, a report by private equity consultant Portfolio Advisors for the board’s Oct. 3 meeting shows.
The private equity portfolio’s net internal rate of return decreased to 12.5% as of March 31 from a net IRR of 13.5% as of March 31, 2022, due to the private market dislocation that began in early 2022 that resulted in a slowdown of investments and exits. Contributions to private equity strategies outpaced distributions to LAFPP’s private equity portfolio in the first half of 2024 and all of 2023, the report noted. If the capital markets continue to improve and distributions increase, the pension fund’s private equity exposure should decline back to or near its target allocation in the near-to-medium term, the report said.
LAFPP is targeting real estate commitments of $300 million to non-core and $150 million to core or core-plus real estate funds in 2025. The pension fund’s real estate portfolio accounts for 5.7% of the total plan assets, below its 8.5% private real estate target allocation, according to a report by real estate consultant Townsend Group.
For the non-core portfolio, fund officials are targeting four to five new commitments with a range of $60 million to $75 million per fund, focusing on niche property sectors such as data centers, residential properties including single family rentals and built-to-rent and industrial assets including industrial outdoor storage and investments on the real estate secondary market.
During 2023-2024, LAFPP only made one investment to an existing core fund in the alternative real estate sector and remained in the redemption queues for two core open-end funds with $30 million outstanding, the Townsend report said.
