Pension: California Public Employees Retirement System
Total Assets: $236 Billion (March 12, 2012)
Private Equity Assets: $32.6 Billion (Dec. 31, 2011)
Private Equity Allocation: 14% (Dec. 31, 2011)
Private Equity Target Allocation: 14%
Chief Investment Officer: Joe Dear
The $236 billion California Public Employees Retirement System renewed its contract with Pension Consulting Alliance, its private equity adviser, through 2014. PCA was initially hired by CalPERS in May 2009 in the wake of the pension’s damaging “pay to play” scandal.
On its Web home page, Portland, Ore.-based PCA declares it “has a zero tolerance policy for gifts at all times. All items even of nominal value will be returned to sender.” Such declarations could only have helped its bid to retain its position as CalPERS’s private equity consultant. Besides its pay to play scandal, the pension had its own gift controversy that was investigated by the California Fair Political Practices Commission.
PCA was founded in 1988 by Allan Emkin, who still runs the firm. CalPERS pays the firm $495,000 annually for its work in helping the pension develop its private equity strategy and perform due diligence. The firm also monitors and reviews the private equity program’s performance and manager selection.
CalPERS’s previous private equity consultant was Pacific Corporate Group, whose controversial leader and founder, Christopher Bower, was associated with Alfred Villalobos, a placement agent and former CalPERS board member who was allegedly at the heart of the giant pension’s pay to play scheme.
PCG’s contract with CalPERS was allowed to expire in October 2010. Bower’s ties to Villalobos hurt PCG’s reputation among pensions that have since moved to distance themselves from any hint of controversy surrounding pay to play scandals at CalPERS, the New York State Common Retirement Fund and the New Mexico State Investment Council.
PCG’s pension consulting business has since changed owners and morphed into a new company, TorreyCove Capital Partners, which is spearheaded by a new leader, David Fann. Mitsubishi Corp. bought an 80 percent stake in TorreyCove.
CalPERS manages the nation’s largest private equity program, with $32.6 billion in assets. The program’s private equity stakes are estimated to be worth 14 percent of CalPERS’s overall assets. That portion exactly matches CalPERS’s target allocation for private equity.