Two of the largest public pension funds are aiming to identify the smaller firms that may not have come across their radars. The California State Teachers’ Retirement System (CalSTRS) and the California Public Employees’ Retirement System (CalPERS) – with the help of investment advisor Altura Capital – are compiling a database filled exclusively with emerging managers and financial service providers.
“There’s been a lot of talk, but no comprehensive method of keeping track of who is actually out there,” says Altura Capital CEO and President Monika Mantilla. “We are building a tool to help us locate new talent and new sources.”
The database will include private equity funds, funds-of-funds, private real estate investments, REITs, hedge funds, consultants and other areas.
Firms fitting CalSTRS’ and CalPERS’ “emerging manager” criteria have until July 17 to complete an online questionnaire accessible via Altura’s website at www.alturacap.com.
Since the project was announced in April, Altura has received thousands of hits on its website from users in the United States, Japan, India, China, Switzerland and England looking to learn more about the database, Mantilla says.
“We originally were focusing strictly on the U.S. market,” she said. “We never expected anything close to the international attention we’ve received.’
For private equity funds looking to gain entry into in the database, the participation criteria set by CalSTRS and CalPERS states that any PE firm looking to apply must have $600 million or less in assets under management for expansion and/or buyout funds, or $300 million or less for venture funds.
Additionally, the current funds of interested parties cannot carry a Roman numeral higher than III, and employees at the firm must own at least 45% of the equity of the firm.
The pension funds’ minimum requirements for emerging private equity managers are that the firms must have a PPM in place and must be a legally structured entity with a corporate tax identification number.
Private equity funds-of-funds, meanwhile, cannot have more than $2 billion of assets under management and their equity must be 45% employee-owned unless the fund is specifically focused on emerging private equity funds. The FoF minimum requirements also state that firms must have a PPM, or a similar proposal, in place in the event of a separate account relationship, and must be a legally structured body.
Mantilla said she expects the database to eventually hold between 500 and 1,000 firms. CalSTRS and CalPERS will each have access and will release a public version of it, but without performance data and other LP investor information.
A CalSTRS spokeswoman did not respond to interview requests by press time and CalPERS did not return phone calls.