CalPERS Re-Ups With Hellman & Friedman

The $200 billion California Public Employees’ Retirement System has committed $300 million to Hellman & Friedman Capital Partners VII LP, representing just half of what the nation’s largest pension fund pledged to the firm’s previous fund. It was only the second commitment to a buyout fund made directly by CalPERS this year.

Fund VII recently closed with $8.8 billion, making it the largest fund ever raised by San Francisco-based Hellman & Friedman LLC. The capital is earmarked for control-oriented buyouts of $300 million to $1.2 billion, mainly in the United States and Europe, in media services, professional services, information services and financial services companies.

CalPERS has been a steady supporter of the firm, beginning with a $100 million pledge to its second fund in 1991. The pension fund went on to commit $120 million to Fund III (vintage 1995); $150 million to Fund IV (vintage 2000); $200 million to Fund V (vintage 2004); and $600 million to Fund VI (vintage 2007). Including the most recent pledge, CalPERS has a total of $1.12 billion committed to the firm, representing 2.2 percent of its alternative investment portfolio. According to CalPERS, as of June 30, 2009, the vintage-2004 Fund V had generated a net IRR of 28 percent and an investment multiple of 1.8x.

According to CalPERS board documents, Hellman & Friedman has demonstrated attractive returns over various markets and economics cycles, achieving top-quartile returns over an 18-year period, with a very low loss ratio.

Earlier this year, CalPERS also committed $300 million to Alinda Capital Partners’s Alinda Infrastructure Fund II LP.

The $200 billion CalPERS has a target allocation to private equity of 14 percent and a range of 9 percent to 19 percent. As of Nov. 13, the actual allocation stood at 11.4 percent.