Pushing forward on plans to increase the size of its private equity portfolio by $1.35 billion over the next five years, last month the California Public Employees’ Retirement System (CalPERS) made $250 million worth of new commitments to two investment funds.
CalPERS invested $125 million in Silver Lake Partners II, a fund managed by Silver Lake Technology Management of Menlo Park, Calif., targeted to top off at $3 billion. That fund will invest in buyout and recapitalization deals in the technology industry. Silver Lake’s first investment fund, a 1999 fund with $2.3 billion in its coffers, has posted returns of 30.2%, according to CalPERS. CalPERS invested $65 million in that fund.
The pension fund also made a $125 million commitment to First Reserve Fund X, managed by First Reserve Corp. of Greenwich, Conn. That fund is slated to close at the end of the month with $2.2 billion. It will take controlling positions in energy companies, with a focus on the services and manufacturing sectors for natural gas. CalPERS is an investor in two previous funds managed by First Reserve. The firm’s $1.84 billion 1992 fund has posted gains of 26%. CalPERS invested $35 million in that fund. The firm’s 2001 fund, a $1.375 billion fund that CalPERS committed $125 million to, is still in the red. It has lost 4.6% of its value.
CalPERS’ private equity portfolio is worth $7.7 billion, or 4.7% of the pension plan’s total assets. About 38% of the pension fund’s private equity portfolio sits in corporate restructuring funds, another 20% is dedicated to expansion-stage capital. Venture capital funds account for a quarter of CalPERS’ private equity allocation.
CalPERS, the nations largest public pension fund, manages a $164 billion investment portfolio.