LA Fire and Police search for PE consultant

The pension, which fired Aldus Equity in May, has a 10% target allocation to private equity.

The Los Angeles Fire and Police Pensions system has decided to scrap the structure of its private equity programme and hire a single consultant who would be in charge of building the pension’s private equity portfolio.

LA Fire and Police had been using two private equity consultants – Aldus Equity and StepStone Group. Aldus served as the general private equity advisor and StepStone had a specific mandate to help the pension build a portfolio of women or minority-owned funds, smaller and locally focused funds.

The pension fired Aldus in May after the firm and its founder, Saul Meyer, were charged with participating in a pay-to-play scheme involving the New York State Common Retirement Fund. In June, LA Fire and Police decided to move to a single consultant model.

The pension is currently searching for its main private equity consultant. According to board documents, candidates for the position are Ennis Knupp, New England Pension Consulting, Cliffwater, Macquarie Funds Management, Portfolio Advisors, StepStone Group, Credit Suisse, Hamilton Lane and Wilshire Associates. The candidates were selected from a group of 19 that applied for the job.

LA Fire and Police’s staff and Pension Consulting Alliance, the pension’s general consultant, will interview the candidates and whittle the group down further before presenting the finalists to the board for a decision.

The board also is considering allowing its private equity manager to operate on a discretionary basis, meaning the manager would not have to come back before the board for final approval of an investment.

The pension was caught up in the New York investigation after the US Securities and Exchange Commission asked two members of the pension board – Elliott Broidy and Sean Harrigan – to turn over information about communications they had with Aldus, Wetherly Financial, StepStone and Pension Consulting Alliance.

Harrigan is a former president of the California Public Employees’ Retirement System, and Broidy founded Markstone Capital Group, a private equity firm with an $800 million fund.

LA Fire and Police has an allocation target of 10 percent for alternatives, which does not include hedge funds. The pension’s annual report for 2008 shows an actual allocation of 4.2 percent, with $607 million invested in the asset class.