Los Angeles Fire & Police Pensions board on Thursday voted to launch two RFPs, one for a private credit fund manager and another for a syndicated bank loan portfolio manager, said Ray Ciranna, general manager, in an email.
Officials at the $27 billion pension fund are conducting the search as a result of a new 2% private credit allocation adopted in June.
Since it can take at least two or three years for a private credit fund portfolio to reach its target allocation, staff recommended the plan create a leveraged syndicated bank loan portfolio to quickly provide exposure to private credit, generate income and eventually fund the private credit fund portfolio, according to a memo to the board.
The bank loan portfolio would be leveraged once to enhance returns. The total initial size of the leveraged loan portfolio would be $400 million — $200 million in cash and another $200 million borrowed from a loan using securities from one of LAFPP's fixed-income portfolios as collateral.
The private credit portfolio would have an initial allocation of $300 million which would be funded over two to three years.
The investment team is working on a timeline for the RFPs but expects the search and selection process to take three to four months, Mr. Ciranna said. The RFPs will be available on the pension plan's website.
Separately, the board in closed sessions committed $22 million each to Charlesbank Equity Fund X, a middle-market buyout fund, and a related fund, Charlesbank Equity Overage Fund X, both managed by Charlesbank Capital Partners. The board had initially approved commitments of up to $25 million each, but the manager reduced LAFPP's commitments.
The pension plan also committed up to $10 million to Avante Capital Partners SBIC III, a lower middle-market private credit and structured equity fund.
In other action, the board on Thursday voted to enter into a new three-year contract with AllianceBernstein to manage $126.9 million in a passive global real estate investment trust portfolio. AllianceBernstein has managed the portfolio since March 2015. The new contract will expire on Feb. 29, 2024.