Firms & Funds

Calpers injects almost $1 bln into PE in March

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Calpers, private equity, pension fund, Blackstone, Carlyle Group, TPG, Towerbrook
Calpers headquarters in Sacramento, California, Oct. 21, 2009. REUTERS/Max Whittaker
  • Commitments include large re-ups with Advent, Ares
  • $290 bln pension commits $50 mln to Cerberus co-investment

California Public Employees’ Retirement System committed almost $1 billion to private equity in March, including $500 million allocated to Advent International’s new flagship fund.

In addition to Advent, Calpers committed $425 million to Ares Management’s new PE vehicle and $50 million to an undisclosed co-investment alongside Cerberus Capital Management.

The $290 billion pension system disclosed its March commitments in its May 16 meeting materials (see Calpers March Commitments).

Calpers is an existing limited partner with all three firms.

Its relationships with Advent and Ares stretch back more than a decade. Prior to the March commitments, Calpers had committed more than $1.4 billion to Advent funds and $850 million to Ares for private equity investments.

Its active investments with Cerberus are grouped in more recent vintages. Calpers allocated $600 million to Cerberus CP Partners in 2014. That commitment netted a 49.9 percent IRR and 1.6x multiple through Sept. 30. A $400 million commitment to Cerberus Institutional Partners V was netting 25.7 percent and 1.6x as of that date.

Larger sums, fewer managers

Last year, Calpers formalized a plan to commit larger sums to fewer managers in order to cull roughly 70 general partners from its holdings.

“Larger capital commitments [to proven managers] ensures more competition for our capital, better performance – we believe – and more favorable fee structures,” Chief Investment Officer Ted Eliopolous said during a June 2015 meeting.

Fewer commitments will not necessarily correspond with smaller commitments, however. The retirement system expects to earmark $5.8 billion for PE investments in the fiscal year ending June 30, according to a November report.

Calpers’s pacing model projected another $5.8 billion in commitments for fiscal 2017, $8.8 billion for fiscal 2018 and $8.9 billion for fiscal 2019.

Calpers had a 9.4 percent allocation to private equity as of March 31, according to its meeting materials. The pension system set an interim strategic target of 10 percent at its June 2015 investment meeting.

Action Item: To see Calpers PE holdings, visit http://bit.ly/1fCUgYC