Two Venture Positions Are OCERS' Entire Private Equity Record
What's New
The Orange County Employees Retirement System discloses the position-level detail of its private equity co-investment program in its latest Investment Committee packet. The summary page reports the program at 4.9x invested capital. The holdings table 40 pages later shows that two positions, both venture vehicles managed by DBL Partners and both closed before the co-investment program formally existed, hold 75.8% of the program's net asset value. Strip them out and the program's multiple falls to roughly 1.5x. Neither position has returned a single dollar of cash.
Why It Matters
Co-investment is sold to boards on two promises: lower fees and better selection. OCERS has delivered on the first and cannot yet demonstrate the second. The plan's performance summary attributes a 41.4% return to the program's design, but the design accounts for almost none of the return. This is the reporting problem every allocator with a young co-investment book faces and few disclose. When one or two marks dominate a portfolio, program-level multiples measure luck rather than process, and they measure it in a direction nobody wants to question while the number is high.
Big Picture Drivers
Concentration is extreme, not merely high: DBL Partners TIAB 2018 holds $581.9m of value on $30.3m called at 19.2x, DBL Partners TIAB 2020 holds $402.3m on $30.3m called at 13.3x, and the remaining 25 positions hold $313.4m between them.
The plan excludes these vehicles from its own deal count: A footnote states they closed before the inception of the program, removing them from the 28-deal tally while leaving them in the performance table.
The program's stated design does not describe them: OCERS targets $5m to $10m per co-investment, and both DBL vehicles were $30m commitments.
Nothing has been realized: Both positions show zero distributions, so the $923.6m of combined gain is an unrealized mark on private venture assets.
The packet offers no look-through: No portfolio company is named in either vehicle, leaving a reader unable to assess whether the mark is conservative or aggressive.
Tail risk in the same book is already realized: H.I.G. Matrix Co-Investors sits at 0.2x and a negative 36.1% return, and H.I.G. Technology Partners A at 0.2x and negative 40.6%.
By The Numbers
75.8% of co-investment program net asset value sits in two positions
19.2x and 13.3x the reported multiples on those two positions
$60.6m of capital called into them, against $984.2m of carrying value
0.03x cash returned per dollar called across the whole co-investment program
$5m to $10m the program's stated per-deal target size
28 deals the program counts, neither of them included
Key Trends to Watch
The first realization decides the mark: Nothing in the program's record tests these valuations until one of the vehicles distributes, and a partial sale at any price would be more informative than another reporting cycle.
Program reporting is on borrowed time: A 4.9x program multiple that a footnote in the same document undermines is unlikely to survive another cycle without a carve-out presentation.
The distortion is not unique to this plan: Any allocator that began co-investing in the 2018 to 2020 window and caught a venture mark carries the same shape, and position-level disclosure is what makes this one visible.
The Wrap
Young co-investment programs are supposed to look like this one: roughly 1.5x, a handful of real write-downs, no realizations, five years in. The difficulty is that OCERS' reporting cannot separate that ordinary outcome from a spectacular one, because two pre-program venture vehicles sit inside the same total and swamp it. The mark survives or it does not, and the answer will not come from a valuation committee. It will come the first time somebody has to sell one of these positions and finds out what a buyer will pay. Until then the program's headline number describes a bet placed before the program existed, and the plan has told its board as much in a footnote.
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