CalPERS sells 46 funds managed by 24 GPs in massive secondary sale

  • $2 bln secondary sale included 46 funds managed by 24 GPs
  • $303 bln pension focuses PE program on fewer managers
  • CalPERS separate accounts generated 12.9 pct last year

California Public Employees’ Retirement System disclosed new details about the $2 billion secondary sale it executed in the 2015-2016 fiscal year.

The sale included the $303.3 billion retirement system’s positions in 46 funds managed by 24 general partners, a Pension Consulting Alliance report included in August meeting materials shows. The secondary sale generated $450 million of gross proceeds.

Buyouts previously covered CalPERS’s private equity secondary sale in November. In March, Private Equity International and Secondaries Investor published a list of funds included in a $3 billion secondary-market sale, which included stakes in real-estate-related funds.

CalPERS Chief Investment Officer Ted Eliopoulos told the Financial Times in January 2015 that the system intended to slash the number of relationships in its PE program by roughly two-thirds. Later that year, the retirement system indicated it would reduce its number of relationships to around 30 general partners.

Even as it culls its roster of GPs, CalPERS remains extremely active as an LP. The pension committed almost $4 billion to the asset class during the year ended June 30, 2016, the PCA report shows.

CalPERS clustered its most recent commitments with a handful of core managers, with groups like Blackstone GroupCarlyle GroupCerberus Capital Management and Clearlake Capital receiving multiple commitments.

Customized separate accounts with certain managers, including Blackstone, now account for about 8 percent of the private-market program’s net asset value, according to the PCA report. Those separate accounts delivered 12.9 percent and 14.2 percent on a one- and three-year annualized basis, respectively.

CalPERS valued its private equity portfolio at $26 billion as of Aug. 5. PE represents around 8.5 percent of CalPERS’s market value, or 1.5 percentage points short of its target allocation to the asset class.

Action Item: See the PCA report at CalPERS’s website: