After 23 years of playing the private equity market, the California Public Employees Retirement System (CalPERS) has taken home $5 billion in profits, says Rick Hayes, who plans to report to the pension fund’s investment committee in Sacramento this week.
Hayes, manager of the fund’s private equity portfolio, oversees nearly $20 billion worth of investments. It’s largely a buyout shop, with almost 40% of its holdings, or $7.5 billion, committed to funds dedicated to corporate restructuring. One-quarter of the portfolio, or $5 billion, sits in venture capital funds.
And, if the fund’s investment committee votes to accept a proposal on the table this month, Hayes’ portfolio might grow by an additional $2.6 billion.
This month, the committee will discuss moving its portfolio of corporate governance funds under Hayes’ umbrella.
Corporate governance funds invest in public companies, take majority ownership of them and hope to turn a profit by using corporate governance strategies such as appointing more independent directors to the company’s board. They are structured like private equity funds, with both general and limited partners.
When CalPERS started investing in corporate governance funds, in 1996, it put them under the private equity umbrella. Soon after, CalPERS’ corporate governance group took it over. Now, with so many initiatives underway, the corporate governance staff is looking to reduce its workload and return the portfolio to the private equity group.
“It’s an operational thing,” says CalPERS spokesman Brad Pacheco.
The proposal is an information item on the agenda, meaning that the investment committee will discuss the issue, weigh the opinions of the board and the staff, and consider taking action on the issue at a later date. If, and when, that might happen is unknown.
CalPERS is the nation’s largest public pension fund. It manages a $164 billion investment portfolio.