San Francisco City & County Employees' Retirement System hired J.P. Morgan Asset Management to manage cash proceeds of securities distributed by the pension fund's private equity funds, said Darlene Armanino, executive assistant, in an email.
The $25.4 billion pension fund issued an invitation-only request for information in January to six firms, four of which provide discretionary distribution management services, including JPMAM's private equity distribution management program.
In a memo to the board recommending the hiring, which approved it at its meeting Wednesday, Chief Investment Officer William Coaker Jr. and investment staff said the reason for the new hiring is because general partners of private equity funds often monetize their positions through initial public offerings.
When those newly listed shares are distributed in kind to limited partners, the memo said, those distributions "typically lose 8-10% on the first few days after distribution but tend to recover in the subsequent 30-60 days" and "poorly managed sales of in-kind distributions can lead to realized losses, which can materially reduce the overall returns from the private investments."
About 10% of the pension fund's $4.9 billion private equity program is in public positions, the memo said.