The California Public Employees’ Retirement System (CalPERS) is once again changing the way public pension funds do business. The fund, which manages $170 billion in assets, this month closed its $500 million CalPERS Corporate Partners Fund that was originally announced last June.
The fund is a joint initiative with Pacific Corporate Group (PCG), a fund advisor and consultant that has served as the pension’s direct private equity investment consultant since 1992. PCG will co-invest and manage with the fund.
The new vehicle, which is one of four new initiatives by the pension fund, will allow CalPERS to make large investments in high growth industries alongside a corporate partner. “The private equity market is becoming increasingly competitive for attractive investment opportunities,” said William Christ, president of CalPERS’ Board of Administration, in a statement last June. “This program offers us the ability to proactively seek out bright corporate minds with industry vision and experience that will enable CalPERS to participate in the best investment opportunities.”
CalPERS Corporate Partners will target businesses with revenues over $500 million and a transaction size between $75 million and $150 million.
CalPERS has made a habit of setting precedents in pension fund investing methods. In recent years, the fund has partnered with several corporate and private equity groups in innovative ways in order to attain higher return rates. Such partners have included Enron Corp., in creating the Joint Energy Development Investments (JEDI) I and II LP, Comcast Corp., Thomas Weisel Partners, Zhone Technologies and The Carlyle Group. In the June statement, the pension system claims these efforts have earned a 25.6% rate of return for its investment portfolio.
The other three programs recently established – each managing $500 million – are a California Biotechnology Fund, a California Initiative Program, which will target small and developing companies in underserved urban and rural California communities, and a real estate technology fund.
Officials at CalPERS did not return calls for this story.