Firms & Funds

CalPERS re-ups $500 mln to Cerberus separate account

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calpers
Calpers headquarters is seen in Sacramento, California, October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker (UNITED STATES) - RTXPWO1
  • Previous Cerberus account netting 41.8 pct
  • CalPERS re-ups to Permira
  • $303.5 bln pension has 8.9 pct allocation to PE

California Public Employees’ Retirement System committed almost $1 billion to private equity in July, including a re-up to a separate account with Cerberus Capital Management.

CalPERS committed $500 million to Cerberus CP Partners II, an investment disclosure included in September meeting materials shows. The account will invest in distressed-for-control deals, spokeswomanRosanna Westmoreland wrote in an email.

Cerberus could not be reached for comment.

The Stephen Feinberg-led firm has emerged as one of CalPERS’s top managers since the system moved in 2014 to trim its roster of PE relationships to around 30 general partners.

CalPERS committed $50 million to a co-investment with the firm earlier this year. It’s committed $1.5 billion to the firm’s funds and separate accounts since 2012.

The $303.5 billion retirement system committed $600 million to Cerberus CP Partners in 2013, which netted a 41.8 percent internal and a 1.5x multiple through Dec. 31, 2015. Cerberus used the fund to acquire a 5.7 percent stake in crude-oil-tanker company DHT Holdings Inc in 2014, according to an SEC filing.

In addition to its commitment to Cerberus, CalPERS committed 440 million euros ($493.3 million) to Permira’s sixth flagship fund, which is targeting 6.5 billion euros with a hard cap of 7.25 billion euros. CalPERS is a limited partner in four of the European buyout specialist’s previous funds.

Permira V closed on 5.3 billion euros in 2014 and has yet to generate meaningful returns. Fund IV, a 11.1 billion euro 2006 vintage fund, was netting a 7 percent internal rate of return and 1.4x multiple as of Dec. 31, according to CalPERS’s website.

CalPERS held 8.9 percent of its assets in PE as of June 30, a little more than a percentage point short of its 10 percent allocation target. The portfolio was valued at $26.4 billion.

Action Item: For more information about CalPERS: www.calpers.ca.gov