Since April, the California State Teachers’ Retirement System has devised a new business plan, named a set of investment advisers and approved a series of investment principles, but, until this month, it had not added a single name to its $4.4 billion private equity portfolio. After a four-month long period of hibernation, the $100 billion public pension fund has made commitments to two private equity funds with ties to Europe.
CalSTRS has made a $26 million commitment to Fondinvest VI, a $371 million secondary fund-of-funds being marketed by Paris-based Fondinvest Capital. The pension plan has also committed $100 million to The Resolute Fund, a $1.5 billion middle market buyout fund closed in October by The Jordan Co. of New York.
Fondinvest VI, launched last year, already has secured $200 million in commitments. The fund will purchase small- and medium-sized secondary interests in mature private equity funds, and also plans to acquire portfolios of unlisted securities at a significant discount to the securities’ net asset value. Its portfolio will be diversified by geography, industry sector and in investment stage.
CDC IXIS Private Equity, a subsidiary of France’s Caisse des Depots, owns 80% of Fondinvest Capital, while Ecureuil Vie, a French insurance company, and BancBoston Capital each hold 10% of the firm. CDC created Fondinvest in 1994 to develop fund-of-funds activity in France. It already managed fund-of-funds activity in the U.S. and the U.K.
The Resolute Fund will target companies with a history of consistent cash flow generation, high operating margins and limited capital requirements, and it has consistently produced upper quartile returns, according to a CalSTRS report.