It doesn’t happen that much these days, but a pension system has established its first allocation to private equity and has committed to a fund-of-funds that backs both buyout and venture funds.
Coral Gables Retirement System, which manages about $433 million, set a target to PE of between 3 percent and 5 percent. The pension’s entrance into private equity has taken shape at its board meetings throughout 2023. Venture Capital Journal affiliate title Buyouts reviewed broadcasts of the meetings along with board minutes.
Dave West, senior consultant with the system’s adviser AndCo Consulting, promoted private equity’s returns and its buffer against public market volatility when suggesting the system add the asset class to its portfolio at Coral Gables’ February board meeting.
“Publicly traded stocks got crushed last year,” West said. “Private equity is just starting to catch up. Private assets are very slow to adjust in their market price. That’s a nice benefit to private investments along with their total return.”
The system’s first commitments were $10 million in April to HarbourVest’s Dover Street XI fund and $5 million in March to Taurus Private Markets Fund II, a fund-of-funds led by Kevin Campbell and Eric Wilcomes, who both previously worked for the private markets team at DuPont Capital Management. Taurus Private Markets, founded in 2018, is based in Malvern, Pennsylvania.
Taurus’s second fund has a 10-year term and three, one-year extensions, according to Campbell. Taurus will make a GP commitment equal to 1 percent of the total fund size not to exceed $1.5 million, according to its presentation. The fund has a 5 percent carried interest rate with an 8 percent preferred rate of return.
According to the presentation, Taurus will charge a management fee of 80 basis points on committed capital for the first four years of the fund, 60 basis points on invested capital for years five to seven and 30 basis points for the remaining years. Clients of consultant AndCo aren’t charged fees for the last three years of the fund term, Wilcomes said.
Taurus Private Markets Fund II plans to invest in 15 to 17 managers, with a total exposure to 200 and 225 underlying portfolio companies, according to Campbell.
Campbell described Taurus as “like a small cap equity manager version of private equity.” About 80 percent of the fund will go to buyout funds, 10 percent to VC funds and 10 percent to private credit.
On the venture side, Taurus looks to invest in VC funds that have historically produced at least a 25 percent net return and have generated at least 2.5 times cash on cash net return. It typically invests in funds smaller than $750 million. So far, it has committed to funds from three early-stage tech investors: CRV, Jackson Square Ventures and Scale Venture Partners.
Taurus Fund II will largely invest in buyouts funds ranging between $300 million and $400 million in size. These funds invest in companies that make between $5 million and $10 million in annual profit, according to Campbell.
Buyouts funds that Taurus invested in previously include healthcare-focused Amulet Capital Partners and industrial/manufacturing specialists Edgewater Capital Partners, Rock Island Capital and Industrial Operating Partners, according to Campbell.
“It’s not the Who’s Who of private equity. It’s the ‘Who’s That?’ of private equity,” Campbell said of the buyouts managers Taurus invests in.
Taurus closed its first fund in June 2021 on $112 million, according to a press release.
Other AndCo clients who committed to Taurus Fund II include West Palm Beach Police Pension Plan and Wayne County Employees’ Retirement System.
AndCo Consulting manages $90.7 billion in assets, with $55.6 billion belonging to public pension systems as of March 2022, according to a regulatory filing.
Taurus Private Markets and AndCo Consulting did not respond to requests for comment.