By Muskan Arora
The $23.6bn Orange County Employees
Retirement System disclosed $750m in private equity pacing plan for 2025.
The system plans to maintain the current
pacing amount through 2026, after which it will raise it to $850m through 2028.
OCERS allocates 15.8% to its private equity
portfolio, against a target of 15%, as of June 30. The long-term target range
is 10%-20%.
The advantage of vintage years and
flexibility to re-up good managers has prompted consultant Aksia to maintain
the current pacing plan.
Due to scarcity of capital in the current
environment, fundraising for managers is lasting longer. In turn, this has
provided investors “access to managers who have had quick fund raises in the
past”.
Additionally, it has also initiated
conversations for value-add drivers including co-investment deal flows.
Alongside managers being very selective of
the deals, the valuation environment has reduced the number of assets managers
are taking to the market, as presented the consultant.
With the rapid growth of AI, the pension
plan sees tremendous opportunities in information technology and healthcare
with an underweight in consumer discretionary and consumer staples.
Through PE, the system invests
predominantly in North America, and then in Europe and slight exposure in Asia
owing to China threat and currency risks, as highlighted in the meeting.
As of July 2024, the private equity
portfolio closed on $349m in commitments for the year.
Long term target is 25% venture and growth
with an increase in buyout activities at 63%.
