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CalPERS commits more than $1 bln in May, June

  • Blackstone, First Reserve and Lindsay Goldberg among recipients
  • The $300 bln retirement system has committed more than $2.1 bln this year
  • Reduced its interim target allocation to PE to 10 pct in May

The California Public Employees’ Retirement System committed more than $1 billion to private equity funds in May and June, according to documents released by the retirement system in advance of its August 18 investment committee meeting.

Beneficiaries include First Reserve, Lindsay Goldberg, Tailwind Capital and Patria Investimentos, a Brazilian shop backed by The Blackstone Group.

The pledges bring the $300 billion retirement system’s reported private equity commitments to more than $2.1 billion in 2014, according to investment committee meeting materials. The ostensibly rapid pace comes despite the CalPERS investment committee having recently pushed to reduce risk in its portfolio, an effort that culminated with the reduction in its interim target allocation to private equity to 10 percent in May.

The CalPERS private equity portfolio stood at 500 basis points above that 10 percent target allocation as of June 30, according to meeting materials. The portfolio was valued at $31.5 billion as of that date.

The “new commitments are in line with this target,” CalPERS spokesman Joe DeAnda told Buyouts in an email. “The new targets will be represented beginning with July data.”

In June, CalPERS committed $400 million to First Reserve’s 13th flagship fund. The firm has been marketing First Reserve Fund XIII since at least 2012, when it received a $400 million commitment from the Washington State Investment Board. First Reserve reportedly reduced Fund XIII’s target from $6 billion to $5 billion last year. The firm declined to comment.

The retirement system’s June activity also included a pair of $150 million commitments to the latest funds of Tailwind Capital and Patria Investimentos, the latter of which held a final close on $1.8 billion for Patria Brazilian Private Equity Fund V in July.

Tailwind Capital is targeting $750 million for its second mid-market fund, its first since co-founder Douglas Karp left the firm in 2013. Tailwind Capital had not responded to a request for comment at press time.

In addition to its commitment to Patria Investimentos, CalPERS also allocated $115 million to Blackstone GTS Co-Invest, which had raised more than $760 million as of July 2, according to a Securities and Exchange Commission filing. The retirement system is a longtime investor in Blackstone funds, having increased its commitment to the firm’s Tactical Opportunities business by $300 million earlier this year.

The Blackstone Group had not commented on the GTS Co-Invest fund at press time. It is not clear what the investment strategy is.

In May, CalPERS committed $250 million to Lindsay Goldberg’s fourth fund, which is reportedly targeting $4 billion. The firm’s previous fund, vintage 2008, had netted a 9.5 percent internal rate of return as of December 31, according to Public Employee Retirement System of Idaho documents. Idaho committed $50 million to the fourth fund earlier this year.

CalPERS’s private equity portfolio generated a 19.45 percent net rate of return for the fiscal year ending June 30, according to meeting materials. The portfolio is comprised of buyout, growth and expansion, credit related, venture capital, opportunistic and currency strategies.