Blackstone and Insight get thumbs up as CalPERS plans to cut number of managers

  • $300 bln pension re-ups $500 mln to Blackstone Tac Opps
  • Forms $400 mln account with Insight
  • Plans to cut 70 managers from PE portfolio

Plans to drop more than two-thirds of its private equity managers over the next five years did not stop the California Public Employees’ Retirement System from re-upping a total of $1 billion to two of its top general partners in April, according to June 15 meeting materials.

CalPERS committed $500 million to Blackstone Group’s tactical opportunities platform in April. The $300.8 billion retirement system also formed a $400 million customized investment account with Insight Venture Partners and committed $100 million to the venture capital firm’s ninth flagship fund, according to the meeting materials.

The June meeting materials also contained information about the pension’s plan to reduce the number of managers within its private equity portfolio from around 100 to about 30, which was first reported by The Wall Street Journal.

“We haven’t made any decisions and it won’t change the way we evaluate our managers – current or future. It will be a long process that we expect to take five years, if not more,” CalPERS spokesman Joe DeAnda said in an email.

CalPERS formed its separate account with Blackstone in 2012 when it allocated $500 million to the Blackstone Tactical Opportunities platform, a broadly mandated strategy that can invest in private equity, real estate and debt, among other assets. The pension re-upped with Blackstone Tactical Opportunities for $300 million in 2014 and co-invested $100 million alongside the platform earlier this year.

CalPERS’ new commitment to Blackstone brings its exposure to the tactical opportunities platform to $1.4 billion, according to pension documents. The retirement system is also an LP in several of the firm’s flagship funds and has committed to its debt platform, GSO Capital Partners.

As for Insight, CalPERS has allocated $162 million to the venture firm since 1999. Its commitments to the firm’s fifth and sixth funds, which were raised in 2005 and 2007, each generated a net IRR of more than 20 percent and an investment multiple of more than 2.5x as of Sept. 30, according to CalPERS’ website.

The retirement system had a 9.6 percent allocation to private equity as of March 31, just short of its 10 percent strategic target, according to its website. CalPERS’ private equity portfolio was valued at $28.9 billion as of the same date.