The $23 billion Los Angeles City Employees’ Retirement System has committed $75 million to three funds within its private equity, credit and real estate portfolios.
The biggest of the three investments was a commitment of up to $40 million in the Hg Saturn 4 A L.P. private equity fund. The fund will target European-based large-cap software and tech firms that have enterprise values of at least $1.5 billion and equity valuations of more than $700 million.
The fund will invest in the companies through leveraged buyouts, carve-outs and privatizations. The fund’s exit strategies include initial public offerings and being acquired by financial institutions, including other private equity firms. The fund also aims to build a portfolio of eight to 10 companies and exit the investments after three to five years.
LACERS also earmarked as much as $25 million to the Mavik Real Estate Special Opportunities VS2 fund, which aims to find private credit real estate investments in the U.S. The strategy involves targeting event-driven and special situations investments, with a focus on structured investments “with asymmetric return profiles, strong margin of safety, and multiple paths to repayment.”
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The fund focuses on middle market investments, with deal sizes between $10 million and $50 million. According to LACERS, the fund will include a combination of “capital structure stress, sponsor liquidity challenges, time sensitivity, rescue financing, or discounted acquisition pricing.”
The pension fund also allotted up to $10 million to the Mayfield Select III fund, which seeks out investments in late-stage and follow-on venture capital investments in enterprise software, consumer, semiconductor and health companies in the U.S. Half of the Mayfield Select fund will be allocated to existing portfolio companies, with the other half going to new investments.
The fund will also invest over a three- to four-year time period among 15 to 18 companies. According to Mayfield, the fund intends to be an active investor in most of the companies it holds and take seats on all of their boards.
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Tags: buyouts, carve-outs, Hg Saturn 4 A, LACERS, Los Angeles City Employees’ Retirement System, Mavik Real Estate Special Opportunities VS2, Mayfield Select III, Private Equity, privatizations
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