By Muskan Arora
Outperformance by both co-investments and secondaries has
given CIO Jonathan Grabel of $81.6bn Los Angeles County Employees Retirement
Association the confidence to hike allocations to the sleeve.
With a return of 9.1% for the total fund in the fiscal year
2024, the net IRR for co-investments was 25%, in 2023.
The CIO is known for liquidity management and his forward-thinking investments within private equity. He also pushed DEI disclosures to 90% throughout the lifecycle of an investment “from diligence to monitoring our exposures.”
In the recent investment meeting, the pension plan proposed
an expansion of up to 35% for its co-investment activities and up to 20% for
its fund-of-fund commitments.
“Our co-investments help us better underwrite our direct
relationships. Our emerging manager program helps identify co-investments and
future larger direct commitments from the fund,” the CIO told Markets Group in an exclusive interview.
While LACERA majorly focuses on buyout investments due to market
depth, scalability, and access to strategic co-investments, separating buyout
and growth buckets would allow higher transparency.
“Internally managed co-investments and secondaries reduce
the J-curve and allow for intentional allocations to sectors, strategies,
industries, and geographies,” as per the recent meeting materials.
The system also plans to double its buyout activities to up
to 100%, as suggested by the proposed guidelines.
Through its PE sleeve, the system has a large exposure to
North America, followed by Europe and Asia.
LACERA is also in the process of finalizing its first commitment to Southeast Asia/India-focused strategy.
Despite recent challenges, private equity has
outperformed its benchmark by 220 basis points over five years, on an
annualized basis.
While choosing managers, the CIO “backs business partners that are investing in their future state and positioning their organization to be successful in an ever more competitive environment” and are focused on mitigating uncompensated risks.
Related: https://www.marketsgroup.org/news/CIO-Jonathan-Grabel-considers-venture-to-be-the-growthiest
