CalSTRS Readies For Next Generation

Attention principals, associates and analysts: California State Teachers’ Retirement System (CalSTRS) wants you!

The Sacramento pension fund has set aside $100 million to invest in private equity funds managed by young and emerging partnerships. That means it will invest in either funds managed by new partnerships spun out of bellwether firms, young firms raising their second fund, or experienced general partners raising their first institutional fund. It’s been dubbed the “New and Next Generation Manager Program” by the pension fund.

“Many of the more established general partners have, or will have, succession management issues that may affect the future successes of those funds,” says Richard Rose, a member of CalSTRS’ alternative investment staff in a report to its investment committee. “And, at many funds, there is an upcoming generation of senior investors who will seek to develop their own funds, as they outgrow their current roles at their existing general partnerships.”

CalSTRS, which manages $4.1 billion in its private equity portfolio, plans to select a single investment manager, either a fund-of-funds manager or an investment gatekeeper, to oversee the program. The program will target buyouts, equity expansion, debt-related, international private equity and venture capital funds.

Once the plan’s investment committee approves the program, the pension fund will issue a request for a proposal, but no date has been set yet.

Stay Tuned

CalSTRS’ alternative investment consultant Mckinsey & Co. will present a semiannual performance review of the plan’s $4.1 billion private equity portfolio to its investment committee on Wednesday. Included in the report are the IRRS and cash in/cash out ratios for 130 private equity funds that CalSTRS has a stake in, from the funds’ date of inception through Sept. 30, 2002. While the pension fund released a similar list in December detailing fund IRRs through the end of the second quarter, the updated report contains never-before released information from the likes of Interwest Partners, New Enterprise Associates, Oaktree Capital Management and Spectrum Equity Partners. PE Week will publish the complete report next week.