Fund Performance Report: Early Stage Boosts CalPERS Performance

Early stage funds are performance leaders among the venture and mezzanine holdings of California Public Employees’ Retirement System’s Golden State Investment Partners portfolio.

Most of these funds saw significant improvements in their expected returns last year, particularly the vintage 2009 GRP III managed by GRP Partners, according to a VCJ analysis of public portfolio reports. The gains were generally greater than those seen by the portfolio’s later stage, balanced and mezzanine funds.

The rise helped bring the median IRR for the venture funds to 6.5% at the end of last year from -15.8% at the end of 2010, the analysis found. The median calculation did not include the portfolio’s most recent 2011 fund since it was just then kicking off.

Golden State Investment Partners is a relatively small piece of the sprawling CalPERS private equity portfolio. The initiative, which Hamilton Lane manages and which targets investments in California, has commitments of $560 million and cash contributions of $406 million.

A mix of venture, buyout, mezzanine, and energy funds with vintages of 2007 and more recent, it has an overall IRR of 0.9%, according to the most recent CalPERS portfolio report updated to December 2011.

The venture and mezzanine holdings now include six funds with positive IRRs and four with negative ones. Again, the 2011 Accel-KKR SCP California Co-Invest, a generalist fund, is not included in the total.

Below, we list the portfolio’s venture and mezzanine funds from best to worst IRR and include the year ago IRR for comparison.

Early Stage Fund Performance Gains
CalPERS’ Golden State Investment Partners Portfolio
Firm Fund  Vintage Fund Type Commitment ($M) Cash In ($M) Cash Out ($M) NAV & Cash Out ($M) 2011 IRR (%) 2010 IRR (%)
GRP Partners GRP III Investors 2009 Early $4.00 $3.20 $0.00 $4.30 23.4 6.1
Huntington Capital Huntington Capital Fund II 2008 Mezzanine $15.00 $11.10 $2.80 $13.90 15 18.5
GRP Partners GRP III 2009 Early $6.00 $3.70 $0.00 $4.30 10.7 -8.4
DFJ Frontier DFJ Frontier Fund II 2007 Early $10.00 $6.50 $0.10 $7.90 8.7 -6.1
DFJ Frontier DFJ Frontier Fund II (B) 2007 Early $10.00 $6.50 $0.10 $7.90 8.7 -6.2
Kayne Anderson Capital Advisors KAPI Mezzanine 2008 Mezzanine $15.00 $7.80 $5.90 $8.80 7.5 0.9
DBL Investors DBL Equity Fund BAEF II 2009 Later $10.00 $4.80 $0.00 $4.60 -3.4 -4.7
St. Cloud Capital St. Cloud Capital Partners II 2008 Mezzanine $15.00 $11.00 $1.90 $9.70 -6.2 -12.2
Pacific Community Ventures Pacific Community Ventures Partners III 2007 Balanced $10.00 $7.80 $0.10 $6.60 -7 -0.4
Claremont Creek Ventures Claremont Creek Ventures II 2009 Early $5.00 $1.40 $0.00 $1.20 -10.4 -37.7
Accel-KKR Accel-KKR SCP California Co-Invest 2011 Generalist $5.00 $0.05 $0.00 $0.00 NM NA
Source: Based on CalPERS portfolio reports Dec. 2011 and Dec. 2010; additional research from the Thomson Reuters database.