California pension cancels Blue Road commitment

The Ospraie spin-out led by Ripplewood co-founder John Duryea has raised $200m since 2014 for its debut fund.

The Merced County Employees Retirement Association (MCERA) has abandoned plans to commit $7.5 million to Blue Road Capital, an agri-focused firm that has raised more than $200 million for its debut fund.

The California pension’s investment board voted in favour of the commitment in July 2015, but reversed the decision at its 28 January meeting. Although Blue Road executives met with the investment committee prior to the July vote, the pension never followed through with any documentation or negotiation, according to Agri Investor’s sources.

Angelo Lamas, MCERA’s acting plan administrator, said the pension’s reversal was related to fund’s falling short of its $750 million target. He declined to comment further on the board’s reasoning.

Blue Road began fundraising in 2014, having initially gone to market with a $750 million target and $1 billion hard-cap, according to sources familiar with the matter. At the time of Blue Road’s founding, Fortune reported the fund was likely to target between $500 million and $750 million.

Blue Road declined to comment.

The New York-based firm has held four interim closes since July 2014, according to filings with the US Securities and Exchange Commission, the most recent of which was held in November with commitments from 13 investors just short of $150 million. In March, it had garnered $68 million from six investors.

Blue Road is now thought to have raised more than $200 million and is expected to hold a final close in March.

According to PEI data, Blue Road’s LPs include the San Mateo County Employees’ Retirement Fund, which committed $15 million, and the New Mexico Employees Retirement Board, which initially committed $30 million and planned to increase the commitment further.

John Duryea formed Blue Road in 2013, spinning out the management team from hedge fund Ospraie Management’s $1.2 billion Special Opportunities fund, which was predominantly allocated toward agriculture investments. Prior to joining Ospraie, he had helped co-found New York buyout firm Ripplewood Holdings.

As previously reported by Agri Investor, MCERA’s investment in Blue Road was to be the pension’s first in the agri sector. The pension currently has $670 million assets under management, according to PEI Research and Analytics.