Scaling back an ambitious plan to create an international private equity portfolio that reached from the Far East to Latin America, the California State Teachers’ Retirement System’s CalSTRS investment committee last Wednesday opted instead to stay put in Canada, the United Kingdom and Europe and to make new investments in Australia and Japan.
According to a new alternative investment plan-created by McKinsey & Co. and adopted by the $113 billion retirement system last month-up to one-quarter of its private equity portfolio will be invested internationally. Currently, almost 18% of the retirement system’s $5.5 billion private equity portfolio, or $974 million, sits in international private equity funds. Its exposure, however, is limited to funds based in Canada, the U.K. and Western Europe.
New markets may be added to the list over time, said Real Desrochers, CalSTRS’ director of alternative investments, in a report to the fund’s investment committee.
Cambridge Associates has been tapped to develop the pension plan’s Australian and Japanese portfolios. It also oversees the fund’s investments in the United States and Canada.
CalSTRS has been bulking up its international private equity portfolio for the last several months. In March the plan made a $65 million commitment to The Blackstone Group’s internationally focused Chemical Coinvest Partners LP, and renewed its $46 million annual commitment to the Alchemy Plan, a London-based buyout shop. In February CalSTRS invested $100 million in Toronto-based Onex Corp., another buyout firm.