By David G. Barry
better manage its private equity portfolio, the Sacramento County (Calif.)
Employees’ Retirement System (SCERS) is for the first time moving towards
selling stakes in past fund investments.
The $12 billion fund’s board has authorized staff to select and retain an advisory firm to lead a secondary sales process for fund-of-funds investments in its portfolio.
According to an agenda report, SCERS’ staff and consultant Cliffwater believe the pension fund should sell its positions in fund
By selling these positions, SCERS would be able to bring its private equity allocation – which was at approximately 13% in December – closer to its 11% target allocation. The move also is seen as a means for the SCERS board, staff and Cliffwater to become comfortable with the secondary process and provide a foundation for future secondary sales.
According to an analysis done by staff and Cliffwater, SCERS has 24 funds which might be primed to be sold in a secondary transaction
. These funds,
according to the report,
SCERS has seven funds where it might make sense to sell to lock in gains and has it 11 funds where it has not backed the manager’s subsequent funds.
SCERS has 50 funds that it sees as “long-term holds.”
Staff and Cliffwater will now look to identify an advisor and bring forth a sale plan to the board. If approved, it is expected to close in the second or third quarter.