Robert Aguallo, general manager of the Los Angeles City Employees Retirement System (LACERS), has stepped down as director of the $12 billion (€7.7 billion) pension fund to join infrastructure investors Cardinal Americas.
Aguallo will manage the Los Angeles-based firm’s debut fund, targeted for $150 million. He has spent the last five years overseeing LACERS’ investment strategy and the previous 15 years as chief operating officer for investment operations at the California Public Employees Retirement System (CalPERS).
“I had many offers, not only in the private equity area, but also in other asset classes,” Aguallo told PERE's sister website PEO. “What attracted me about Cardinal Americas was the niche, the infrastructure sector that it proposed to engage in. I thought it was cutting edge, and something that pension funds should look at.”
Infrastructure investments have emerged as an increasingly popular asset class among many limited partners, as concerns over a US economic downturn have driven investors towards capital destinations reputedly immune from macro business cycles.
Under Aguallo’s direction last year, LACERS had a 7 percent allocation to alternatives but no specific infrastructure allocation. In 2007, LACERS’ general fund enjoyed a 9.9 percent rate of return.
Aguallo said his departure with LACERS was amiable, and that he had informed the pension’s board of directors last autumn that he was contemplating a jump to the private sector. Aguallo will be replaced by Sally Choi, former deputy mayor of Los Angeles for finance and innovation and LACERS’ assistant general manager.
In his new role, Aguallo will attempt to drum up investor interest in Cardinal Americas’ debut fund. Launched eighteen months ago, the fund is slated for a first close on $50 million by August, and is expected to hit its goal of $150 million by December, according to a spokesman.
Asked if Aguallo was brought in to buoy a lacklustre investor response to the fund, a spokesman for Cardinal Americas said that the fund’s reception among limited partners was positive.
“I think an understanding of how pension funds manage their portfolio and the trends their looking for and the strategies they follow will benefit me tremendously,” Aguallo added.
Aguallo is the latest in a line of public pension directors to move over to private equity, as state and municipal retirement systems find it increasingly difficult to compete with the industry’s compensation packages. In the past two weeks, CalPERS chief investment officer Russell Reade and chief executive Fred Buenrostro have both left their positions for private sector opportunities.
Cardinal Americas, co-founded in 2006 by George Pla, owner of Southern California civil engineering firm Cordoba, targets middle market companies that supply the infrastructure sector, including architectural, construction and engineering service firms, as well as equipment rental, operations and maintenance companies.
The firm is vice chaired by Robert Bobb, chairman of Cardinal Growth, a $102 million mid-market fund based in Chicago.