The Contra Costa County Employees’ Retirement Association (CCCERA) is considering updates to its pacing plan for its private equity portfolio, highlighting what its consultant calls a “tale of two cities” — a widening spread between value/premium industries and smaller/larger deals as of 2022 that has fueled a flight to quality.
According to materials from CCCERA’s December board meeting, private equity buyout multiples year-to-date in 2025 have increased, driven by larger transactions in sectors with lower exposure to tariff-related volatility, such as software and healthcare services.
In the materials, consultant StepStone Group reported that after April 2025, mergers and acquisitions activity began to rebound into late summer as clearer tariff direction and improving debt markets allowed companies to implement mitigation strategies. This produced sector-specific impacts that were milder than expected.
StepStone noted secondary markets have also become an important liquidity source for both limited-partner-stake sales and general-partner-led continuation vehicles, while favorable lending conditions have enabled selective dividend recaps to support distributions to paid-in capital (DPI). With more than 60% of private equity companies now over four years old, a broad set of assets is coming to market as buyers and sellers re-engage, shared the consultant.
Although median private equity performance has outpaced the MSCI ACWI in 20 of 22 vintages from 2000–2021 by 300–500 bps — with top-quartile funds performing even better — the consultant noted recent scrutiny over private equity’s relative underperformance versus richly valued public markets has raised questions about the sustainability of current public-equity return levels, the materials noted.
According to the meeting materials, CCCERA increased its target private equity allocation from 11.0% to 15.0% in 2021. In light of the shifting market dynamics, StepStone updated its pacing analysis for CCCERA as of Sept. 30, 2025 — reflecting a $13B total portfolio with $1.3B in private equity and $0.2B in real assets — and recommended annual commitments of roughly $475M (±20%) to reach the 15% target and $90M (±20%) to reach its 3% real assets target over the next decade.
CCCERA’s private equity portfolio includes $2.7B in commitments across 70 primary and fund-of-funds investments and had a market value of $1.3B as of June 30, 2025, outlined the materials. Over the prior 12 months, it drew $191.8M and distributed $141.1M, producing a $109.9M net gain, a one-year internal rate of return (IRR) of 9.7%, and a since-inception IRR of 12.2%. The portfolio’s 12.2% since-inception IRR exceeded the median private markets benchmark by 298 bps and the S&P 500 by 48 bps.
The materials also noted that, since 2017, CCCERA has emphasized direct primary commitments to private equity funds (the Core Primary Fund Portfolio), while earlier investments consist of legacy fund-of-funds and primary funds. Although still relatively early, the Core Primary Fund Portfolio has delivered a 14.5% since-inception IRR, and its total value to paid-in capital and DPI are expected to rise as more value is realized. As this portfolio continues to grow, the legacy portfolios will represent a smaller share of overall performance, highlighted the consultant.
The private equity portfolio is broadly diversified by strategy, with the largest allocations to buyout (59%) and venture capital (18%). While currently concentrated in fund-of-funds, StepStone’s presentation said future allocations are expected to shift toward primary commitments. By fund manager, more than 30% of exposure sits with three legacy fund-of-funds managers. By industry, the portfolio is balanced, with its largest exposures in information technology (34%), industrials (20%), and financials (15%).
CCCERA’s real assets portfolio includes $691.2M in commitments across 14 primary and fund-of-funds investments, with a market value of $196.5M as of June 30, 2025. Over the prior 12 months, it drew $18.9M and distributed $44.9M, generating a $10M net gain, a one-year IRR of 4.9%, and a since-inception IRR of 4.4%.
