LAFPP Likes Media, Distressed Debt P.E. Funds

Jan 25 2007 | 10:17am ET

The $14.8 billion Los Angeles Fire and Police Pension Fund on Jan. 18 issued a recommendation to its board to approve an investment of up to $10 million in the Providence Equity Partners VI and up to $10 million in the Sankaty Credit Opportunities III.

PEP VI is expected to be an $8 billion fund with a focus on buyouts of market-leading media and communications companies, and Sankaty is seeking to raise $2 billion for its third fund focusing on distressed debt, mezzanine investments and other special situations, according to the system. PEP VI’s management fee is 1.6% of capital commitments to the fund up to $4 billion and 1.5% per annum on capital commitments in excess of $4 billion during the investment period. Thereafter, the fee will be reduced to 1.0% of net invested capital.

Sankaty III’s management fee will be 1% of committed capital from the initial closing until the date on which 50% of capital commitments are called. The fee will increase to 2.0% of committed capital through the fifth anniversary of the fund, and 2% of the limited partners capital account thereafter.

The board has allocated 9% of the pension fund to private equity, totaling $1.33 billion while, adjusting for the over allocation factor, the fund’s maximum commitment amount is $1.6 billion, according to the system. To date, the fund has committed approximately $1.1 billion to private equity, leaving about $505 million yet to be committed.

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