Fund Performance Report: Results Are Mixed for CalPERS’ PEP Portfolio

The California Public Employees’ Retirement System’s Sacramento Private Equity Partners portfolio shows the challenges of modern day venture.

The portfolio’s venture funds are largely in the black. More have positive IRRs than negative ones. But the median IRR is -4.2%, suggesting some difficulties navigating an exit-starved environment, according to a VCJ analysis of CalPERS’ latest fund performance report.

The Sacramento Private Equity Partners portfolio is a tiny slice of CalPERS’ massive investment holdings and is managed by Oak Hill Investment Management. Oak Hill has marching orders to invest in top venture funds, small- and middle-market buyout, distressed opportunity funds and secondary transactions.

The analysis found 20 venture-related funds in the portfolio with vintages of 2006 to 2011, including several funds with a balanced or generalist’s approach. They are a well diversified lot with seven targeting early stage investing, five looking late stage and four addressing a balanced or generalist’s approach.

The most active year for commitments was 2007, followed by 2010 and 2008, according to the latest performance report updated to September 2011. The youngest of the funds are obviously early in their life cycle and a negative IRR might be expected. But even after backing out funds with vintages of 2009 and more recent, the median IRR remains -2.8%.

Below, we show you the 20 funds from the portfolio with their IRRs, distributions and commitments. Among the most impressive are two Oak Hill Investment Management secondary funds – Secondary Investments 2008-B and Secondary Investments III. Both look to be doing quite well. Also doing well is Emergence Capital Partners II from 2007.

On the other hand, Tallwood III Annex from 2008 is off to a challenging start. So is The Column Group from 2007.

What follows is a rundown on 20 funds from the CalPERS Sacramento Private Equity Partners portfolio.

Third Rock Ventures II

Vintage: 2010

Firm: Third Rock Ventures

Commitment: $7.1 million

Cash In: $1.1 million

Cash Out: 0

Portfolio Value and Cash Out: $860,000

IRR: -40.7%

TauTona Partners

Vintage: 2010

Firm: TauTona Group

Commitment: $4.8 million

Cash In: $1.2 million

Cash Out: 0

Portfolio Value and Cash Out: $797,000

IRR: -38%

Tallwood III Annex

Vintage: 2008

Firm: Tallwood Venture Capital

Commitment: $9.5 million

Cash In: $9.5 million

Cash Out: 0

Portfolio Value and Cash Out: $3.7 million

IRR: -37.9%

OrbiMed Private Investments IV

Vintage: 2010

Firm: OrbiMed Advisors

Commitment: $5.9 million

Cash In: $1.2 million

Cash Out: $37,000

Portfolio Value and Cash Out: $1.2 million

IRR: -10.2%

Meritech Capital Partners IV

Vintage: 2011

Firm: Meritech Capital Partners

Commitment: $4.8 million

Cash In: $929,000

Cash Out: 0

Portfolio Value and Cash Out: $896,000

IRR: -8.7%

The Column Group

Vintage: 2007

Firm: The Column Group

Commitment: $4.8 million

Cash In: $2.6 million

Cash Out: $8,800

Portfolio Value and Cash Out: $2.4 million

IRR: -4.6%

Pinnacle Ventures Equity Fund I-O

Vintage: 2007

Firm: Pinnacle Ventures

Commitment: $7.1 million

Cash In: $5.6 million

Cash Out: $323,000

Portfolio Value and Cash Out: $5.1 million

IRR: -3.3%

Bridgescale Partners

Vintage: 2006

Firm: Bridgescale Partners

Commitment: $7.1 million

Cash In: $6.4 million

Cash Out: $526,000

Portfolio Value and Cash Out: $6.1 million

IRR: -2.2%

Third Rock Ventures

Vintage: 2007

Firm: Third Rock Ventures

Commitment: $4.8 million

Cash In: $2.9 million

Cash Out: $487,000

Portfolio Value and Cash Out: $2.9 million

IRR: 0.6%

DAG Ventures III-QP

Vintage: 2007

Firm: DAG Ventures

Commitment: $39.5 million

Cash In: $28.4 million

Cash Out: $3.1 million

Portfolio Value and Cash Out: $29.2 million

IRR:  0.9%

JMI Equity Fund

Vintage: 2007

Firm: JMI Equity

Commitment: $14.3 million

Cash In: $13.2 million

Cash Out: 0

Portfolio Value and Cash Out: $14.1 million

IRR: 2.7%

Pinnacle Ventures Equity Fund II-O

Vintage:  2008

Firm: Pinnacle Ventures

Commitment: $24.5 million

Cash In: $12.2 million

Cash Out: $3.1 million

Portfolio Value and Cash Out: $12.9 million

IRR: 4%

OHIM Secondary Investors II

Vintage: 2007

Firm: Oak Hill Investment Management

Commitment: $5.4 million

Cash In:  $4.9 million

Cash Out: $2.5 million

Portfolio Value and Cash Out: $5.5 million

IRR: 4.2%

TA XI

Vintage: 2010

Firm: TA Associates

Commitment: $9.5 million

Cash In: $2.95 million

Cash Out: 0

Portfolio Value and Cash Out: $3.05 million

IRR: 6.8%

Pinnacle Ventures Debt Fund III

Vintage: 2008

Firm: Pinnacle Ventures

Commitment: $7.1 million

Cash In: $4.3 million

Cash Out: $432,000

Portfolio Value and Cash Out: $5.1 million

IRR: 11.8%

New Enterprise Associates 13

Vintage: 2009

Firm: New Enterprise Associates

Commitment: $4.8 million

Cash In: $2.5 million

Cash Out: $182,000

Portfolio Value and Cash Out: $2.9 million

IRR: 15.3%

Institutional Venture Partners XIII

Vintage: 2010

Firm: Institutional Venture Partners

Commitment: $14.3 million

Cash In: $5 million

Cash Out: 0

Portfolio Value and Cash Out: $5.4 million

IRR: 15.7%

Emergence Capital Partners II

Vintage: 2007

Firm: Emergence Capital Partners

Commitment: $19.5 million

Cash In: $13.1 million

Cash Out: 0

Portfolio Value and Cash Out: $19 million

IRR: 19.8%

OHIM Secondary Investments 2008-B

Vintage: 2008

Firm: Oak Hill Investment Management

Commitment: $2.13 million

Cash In: $2.08 million

Cash Out: $2.5 million

Portfolio Value and Cash Out: $3.2 million

IRR: 26.9%

OHIM Secondary Investors III

Vintage: 2007

Firm: Oak Hill Investment Management

Commitment: $465,000

Cash In: $480,000

Cash Out: $816,000

Portfolio Value and Cash Out: $941,000

IRR: 32.2%