CalPERS Pledges $800M To Diverse Set Of Funds

The California Public Employees’ Retirement System recently pledged a total of more than $800 million to an array of funds with strategies ranging from Asian growth and Italian buyouts to U.S. energy. Interestingly, the limited partner expanded upon its previous pledges abroad while reducing the size of commitments to domestic funds.

This latest round of pledges follows a recent report in The Wall Street Journal that CalPERS has been selling stock of late, despite the weakness in the public markets, in order to meet its cash obligations to buyout firms, among others. Asked about the report, Pat Macht, a spokeperson for CalPERS, told Buyouts: “We always have capital calls for our investment programs and we always manage our cash as appropriate.”

The country’s largest pension fund, with $233.4 billion in assets under management, CalPERS recently committed $150 million to Carlyle Asia Growth Partners IV LP, up from a $75 million pledge to the predecessor; €150 million ($234 million) to Clessidra Capital Partners II LP, up from $61 million; $300 million to First Reserve Fund XII LP, down from $500 million; and $125 million to Welsh, Carson, Anderson & Stowe XI LP, down from $175 million.

The Carlyle Group is seeking $1 billion for its Carlyle Asia Growth Partners IV LP to acquire large minority positions in emerging companies in high-growth sectors in China, India, Japan and South Korea; making equity investments ranging from $5 million to $50 million. CalPERS has a total of $3.5 billion committed to the Carlyle Group, representing 7.1 percent of its private equity portfolio. Carlyle Asia Growth Partners III LP (2005 vintage), to which CalPERS committed $75 million, had a net IRR of 30.5 percent as of Dec. 31, 2007, and an investment multiple of 1.2x, according to the LP.

Milan, Italy-based Clessidra SGR S.p.A. is targeting $2.4 billion for Clessidra Capital Partners II LP to invest in Italian utilities, infrastructure and manufacturing. It plans to target companies with enterprise values of €200 million to €1.5 billion. The firm gathered $1.1 billion for its first buyout fund, which closed in 2005. CalPERS pledged $61 million to the 2005 vehicle and reports that as of February 2008, Fund I made nine investments with a total cost of €443.3 million, generating a total pro forma value of €1.2 billion, for a 2.7x multiple of cost and a gross IRR of 144.1 percent. The San Francisco Employees’ Retirement System and the Pennsylvania State Employees’ Retirement System each committed €20 million ($31.7 million) to Clessidra Capital Partners II.

First Reserve Corp. of Greenwich, Conn. is targeting $15 billion for Fund XII, with a hard cap of $16 billion, to acquire stakes of $200 million to $1.5 billion in global companies in several energy industry sectors, including energy-related manufacturing and services companies; energy and natural resources reserves; renewables and alternative energy; and energy-related insurance and financial investments. CalPERS has a total of $1 billion committed to the firm. According to the LP, since its inception First Reserve has invested $7.8 billion in 74 portfolio companies, generating a 28.2 percent net IRR. CalPERS pledged $500 million to Fund XI.

Welsh, Carson, Anderson & Stowe intends to gather $4.5 billion, with a hard cap of $5 billion, for Fund XI for control-stake management buyouts in growth-oriented middle-market companies focusing on the information, business services and health care industries. Welsh, Carson, Anderson & Stowe X LP, which raised $3.4 billion, had an IRR of 9.82 percent as of March 31, 2008, according to the California State Teachers’ Retirement System. CalPERS committed $175 million to Fund X.