San Jose Federated board approves $135 million private‑markets pacing plan

SAN JOSE — The San Jose Federated City Employees Retirement System board on Thursday approved its annual private‑markets pacing plan, setting target commitments of $135 million for the fiscal year that begins July 1.

Dinesh, the system’s private‑markets lead, told trustees the pacing plan guides how much the system should commit to private equity, private debt, real assets, growth real estate and other drawdown strategies each year so the plan can move toward its long‑term strategic asset allocation. “Ultimately, what we're looking for is approval of the target commitment amounts for the upcoming fiscal year, which starts on July 1,” Dinesh said.

The plan the board approved was the amount staff and consultants recommended after modeling 10‑year projections and reviewing current allocations. The CIO’s office reported that for the current fiscal year the system executed 17 commitments totaling approximately $144 million — a level above the pacing plan — and that the board’s private‑markets allocation currently sits about 2 percentage points above the prior strategic target (23% versus 21%).

Trustees asked several questions before the vote about liquidity and sector concentration. Dinesh said smaller commitment sizes are the primary tool to limit deployment risk: “Instead of being a 0, we're actually only committing $25,000,000” in one sub‑asset class (buyout/vintage allocations), he said, noting the plan has shifted to smaller commitment sizes compared with past years.

The board also heard that private debt managers returned capital earlier than expected in the current year, creating redeployable cash that allowed the plan to exceed pacing expectations. Staff said the system expects distributions to outpace capital calls in coming years and that private markets are, on the modeling, largely self‑funding over the next decade.

Trustees voted to approve the pacing plan after a motion from Trustee Wagner and a second from Trustee Linder. A roll call recorded ayes from the trustees present; the board chair cast the affirmative vote as well.

The approved pacing plan includes an IPS limit clause that allows a theoretical maximum commitment (150% of the pacing plan plus cumulative catch‑up for under‑commitments) of up to $224 million; staff said the board’s requested approval today was the highlighted $135 million figure, not the maximum.

The board received additional detail in the staff presentation about the plan’s ten‑year net asset value forecast, projected distributions and capital calls, and a breakdown of which private sectors staff and consultants plan to target, including lower‑middle‑market buyouts, early‑stage venture driven by AI‑related formation, direct lending (private debt), data‑center and other alternative real‑estate sectors, and real assets tied to music royalties and energy‑transition infrastructure.

The board will revisit execution and results through usual investment committee oversight and staff reporting.

Votes at a glance: The board approved the pacing plan motion (moved Trustee Wagner; second Trustee Linder) by roll call (ayes recorded).