LPs

LACERS prepares to launch new RFP for PE consultant

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Los Angeles City Employees’ Retirement System, pension fund, private equity
Los Angeles, California, USA - July 21, 2016: Dusk aerial of the Santa Monica 10 and Harbor 110 freeway interchange near downtown Los Angeles. Photo courtesy trekandshoot/iStock Editorial/Getty Images
  • Board will vote on new RFP on Oct. 10
  • Timeline calls for new consultant contract by mid-2018
  • Previous RFP exploded after board members disparaged finalists

Los Angeles City Employees’ Retirement System is preparing to request proposals from outside firms for a new private equity consultant, three months after its previous RFP process collapsed in the middle of a board meeting.

The board will vote on whether to launch the new RFP at its Oct. 10 board meeting, according to meeting materials. Under the proposed timeline, staff would publicly release its request for submissions on Oct. 30 and the board would award its contract next May. The next contract would likely be finalized in June or July 2018.

The consultant will help the $15.7 billion retirement system source and select new PE commitments, in addition to providing regular updates on the portfolio and its performance.

In July, the retirement system’s 10-month RFP process narrowed the field to its incumbent PE consultant, Portfolio Advisors, and TorreyCove Capital Partners. The board was slated to make its pick at its July 11 board meeting; however, Board Member Nilza Serrano accused Portfolio Advisors of willfully misrepresenting its track record.

Another board member claimed TorreyCove Capital Partners, which advises multibillion-dollar PE programs for Oregon Investment Council and New Jersey Division of Investment, would be unable to handle LACERS’s $1.5 billion PE program.

Later in the meeting, the board opted to pull the plug on the RFP and start from scratch. LACERS later approved a one-year extension for Portfolio Advisors to accommodate the timeline of its new RFP.

In the aftermath of the meeting, leaders at both TorreyCove and Portfolio Advisors issued statements signifying displeasure with the accusations hurled at the July 11 meeting.

“The RFP process has been far more time-consuming and contentious than we expected and, as a result, we’re unlikely to participate in the renewal,” Brian Murphy, managing member and managing partner of Portfolio Advisors, told Buyouts at the time.

In its Oct. 10 meeting materials, the board invited Portfolio Advisors to submit for the next contract.

LACERS valued its portfolio at $1.57 billion as of Dec. 31. The portfolio has netted an 11 percent internal rate of return since inception.

Action Item: For more information on LACERS’s RFP: http://bit.ly/2y5ueKv

Dusk aerial of the Santa Monica 10 and Harbor 110 freeway interchange near downtown Los Angeles on July 21, 2016. Photo courtesy trekandshoot/iStock Editorial/Getty Images