BlackRock, Goldman Sachs among six bids to oversee CalPERS PE program

  • AlpInvest, Hamilton Lane, HarbourVest, Neuberger Berman also bid
  • CalPERS hopes to commit $7 bln to $10 bln in PE per year
  • Structure of partnership remains unclear

California Public Employees’ Retirement System received six bids in its solicitation of outside partners to help manage its private equity program.

In addition to BlackRock, which was widely reported to be among the contenders, AlpInvest Partners, Goldman Sachs, Hamilton Lane, HarbourVest and Neuberger Berman responded to the retirement system’s request for information to form a strategic partnership, spokesman Wayne Davis told Buyouts in an email. The $362.7 billion retirement system closed its submission period last week.

While the strategic partner would have discretion over the private equity programs investments, “the partner is expected to act as an extension of CalPERS staff and continuously dialogue with CalPERS PE Staff on the management of the portfolio,” according to the solicitation. “The full scope of the investment opportunities that will be included is still under review by the CalPERS investment committee.”

It’s unclear how CalPERS will structure the outside partnership, or if it will even happen.

In its solicitation, CalPERS staff indicated they were open to a variety of legal and governance structures to help it achieve its goals, which include allocating between $7 billion and $10 billion of PE commitments per year. CalPERS requested firms provide an overview of how they would structure the partnership, along with a model for how they would be compensated. Proposals were also expected to detail how the partnership would expand the retirement system’s portfolio of co-investments, in addition to plans for commitments to new funds and separate accounts.  

CalPERS solicited proposals from a limited number of outside firms for the partnership, though its unclear how many firms received the RFI. Materials presented in closed session of the CalPERS’s Nov. 13 investment committee suggested the partner shouldn’t be a firm that competes directly with the retirement system’s existing managers.

CalPERS plans to review the proposals and visit each of the firms over the next two months, according to a copy of the RFI. Firms would then interview with CalPERS’s investment committee in March or April.

The RFI doesn’t specify when CalPERS would formally launch the partnership, should a finalist receive board approval. However, the Nov. 13 closed materials indicate the retirement system originally planned to implement the new partnership “as close to the new fiscal year (July 1, 2018) as possible.”

Calpers headquarters is seen in Sacramento, California, October 21, 2009. REUTERS/Max Whittaker 

UPDATE: The story was updated to include additional information about the RFI and CalPERS’s timeline.