The California State Employees’ Retirement System (CalPERS) Investment Committee met on Valentine’s Day last week. Love may or may not have been in the air, but a continued commitment to private equity was evident, and the committee received a rosy report on its California Initiative Program.
CalPERS’ staff submitted a report to the Investment Committee that the pension fund had made the following private equity commitments totaling $75 million:
CalPERS committed $30 million to the Carlyle Group’s Carlyle Asia Growth Partners III. The fund has a goal of $350 million and plans to have a final closing in March. It held a first closing of $201 million this past December. The fund will invest between $5 million and $35 million in non-leveraged transactions for minority positions in startup companies in various sectors. The investments will be focused in Asia with preference for deals in China, India, Japan and South Korea.
The pension system will invest 20% of Draper Fisher Jurvetson’s DFJ Element fund, up to $30 million. The fund had a first close of $120 million and raised its cap to $225 million. It expects to have a final close by the end of Q2. The fund invests in clean technology venture deals. CalPERS’ commitment comes from its $200 million allocation to the CalPERS Environmental Technology Program, which was established in 2004.
CalPERS committed $15 million to Rockport Capital Partners’ second fund, Rockport Capital Partners II. The fund closed in January with more than $261 million in commitments. It will invest between $1 million and $10 million in various stages of energy companies. The fund focuses on energy and power technologies, advanced materials and process and prevention technologies. Like DFJ Element, CalPERS’ commitment comes from its $200 million allocation to the CalPERS Environmental Technology Program.
LP Capital Advisors performed due diligence on behalf of CalPERS for the Carlyle Asia Growth Partners III. Pacific Corporate Group performed due diligence on behalf of CalPERS for DFJ Element and Rockport Capital Partners II.
At the same meeting, the CalPERS Investment Committee received a report from LP Capital Advisors and Pacific Community Ventures on the CalPERS California Initiative Program. The program, which was launched in Nov. 2001, invests to spur investment in underserved areas and generate jobs for the Golden State. CalPERS committed $475 million to 10 different partnerships and as of this past December has invested half of the program’s capital. The program has gained 16.3% in annual returns as of last September. The report states that the 68 companies backed by the program have created almost 2,500 jobs. Almost 600 of those jobs are in California.
CalPERS also reported that State Street Bank and Trust will continue to serve as the pension system’s master custodian. The Boston-based firm will provide full accounting and custody services for CalPERS.
CalPERS has more than $206 billion under management and more than $9.4 billion in alternative investments and private equity. It is a limited partner in funds managed by firms such as Austin Ventures, Blackstone Group, Coller Capital, Lexington Partners and U.S. Venture Partners.