CalPERS Commits $900 Mln To Silver Lake, Blackstone’s GSO, Triton

CalPERS pledged $400 million to the $10.3 billion Silver Lake Partners IV LP on April 13; help with due diligence came from Pension Consulting Alliance, according to the fund’s monthly report released on June 9. CalPERS bought a 9.9 percent stake in Silver Lake in 2008, according to a report by sister news service Reuters.

Silver Lake billed Fund IV as the largest technology-focused private equity fund ever raised when it announced the fund’s completion on April 18. The Menlo Park, Calif., buyout firm said the fund’s strategy is to “selectively invest in market leaders” in the global tech sector, to “partner with management teams in a differentiated way” and to leverage its “expertise and range of international relationships developed since our founding fourteen years ago.” Among the types of technology companies on its radar, Silver Lake lists semiconductors, cloud computing, information technology infrastructure, tech-enabled financial markets, transaction processing, mobile communications, and e-commerce.

Silver Lake has drawn attention this year for its role in the take-private transaction for computer maker Dell Inc, with Fund IV possibly providing some of the capital for that deal.

CalPERS has already committed to at least five Silver Lake investment products. The pension fund’s largest pledge — $480 million — came in 2007 to Silver Lake Partners III LP. That investment had earned a net IRR of 17.3 percent as of Sept. 30, 2012, according to the latest report from the fund. CalPERS’s $73.2 million commitment to the debut fund in 1999 has generated a net IRR of 25.1 percent, making it the best performer among its Silver Lake investments.

CalPERS also committed $400 million to GSO Energy Partners LP, with due diligence conducted by Cambridge Associates.

GSO Energy Partners is an investment vehicle managed by GSO Capital Partners, which manages funds focusing on leveraged loans, high yield bonds, distressed debt, rescue financing and mezzanine lending. In the energy sector, GSO has helped provide financing for Crosstex Energy to fund natural gas pipeline and infrastructure expansions, for example.

Led by Bennett Goodman, senior managing director and co-founder of GSO, the Blackstone Group unit reported $58 billion in assets under management as of March 31. CalPERS holds a separate account with Blackstone Group in a sign of a deep relationship between the two entities.

Asked about the CalPERS investment in GSO Energy Partners LP, a Blackstone Group spokesperson said in an email, “Blackstone Group manages specialized separate funds for a small group of limited partners to invest in its credit-oriented energy strategies.”

CalPERS has already invested in at least two prior GSO Capital products. The pension fund committed $250 million to GSO Capital Opportunities Fund II LP in 2011 and reported a net internal rate of return of 27.0 percent as of Sept. 30, 2012. It committed $100 million to GSO Capital Opportunities Fund LP in 2008 and reported an IRR of 18.0 percent as of Sept. 30.

Finally, CalPERS committed 75 million euros, or about $100 million, to Triton Fund IV LP, with due diligence from Altius Associates. That fund closed with 3.3 billion euros, a record sum for a Germany-based manager, according to a recent report by The Financial Times.

The Triton funds are earmarked for medium-sized northern European businesses with a focus on Germany, Switzerland, Austria, Denmark, Finland, Norway and Sweden, according to a recent statement from the firm. In a deal disclosed on June 14, Abengoa sold 100 percent of its Befesa unit to Triton in a deal that valued the industrial waste manager at 1.08 billion euros. Founded in 1997, Triton focuses on businesses in the industrial, business services, consumer and health sectors; it runs offices in London, Germany, Luxemburg, China and Sweden.

As of April 30, CalPERS reported a 12 percent actual allocation to private equity, and a one-year net asset return of 14.9 percent, trailing its 16.4 percent return from public equities. CalPERS valued its private equity portfolio at $32 billion as of April 30.

A CalPERS spokesman declined to comment.

Gregory Roth, senior editor of Buyouts, contributed to this report