Hayes’ Departure Doesn’t Rattle CalPERS

Until the California Public Employees’ Retirement System (CalPERS) names a new director to manage its $8 billion private equity portfolio, things are likely to chug along as usual, without any major new initiatives or changes, says Brad Pacheco, a spokesman for the $161 billion pension fund.

Earlier this month Rick Hayes tendered his resignation as head of private equity investments for CalPERS to become a managing partner at Oak Hill Capital Management, effective July 1.

As the pension fund jumps into a new fiscal year at the start of July, its private equity team will largely focus on efforts already set into motion under the aegis of Hayes.

The nation’s largest pension fund outlined its priorities at a meeting of its investment committee in Sacramento earlier this month. In the coming fiscal year, CalPERS’ private equity group will work on the implementation of a new plan to invest in environmental technology, a priority set by State Treasurer Phil Angelides earlier this year.

Angelides’ so-called “Green Wave’ plan calls on CalPERS and California State Teachers’ Retirement System to invest a combined $1 billion of PE funds into companies with environmental track records, and another $500 million into VC deals or funds that promote the growth of environmental technologies.

CalPERS also plans to invest more in international private equity funds, and rebalance the portfolio opportunistically by exploring options in the secondary market. And, like Florida and Wisconsin, it will address the issue of portfolio manager recruitment and retention.

Following on the heels of others that are tackling the issue surrounding disclosure of fund performance data, CalPERS acknowledged it would also consider introducing legislation at the state level to address disclosure.

CalPERS is also mulling over the possibility of introducing legislation to advocate rights for limited partners, leveraging the strength of the 18-month-old Institutional Limited Partner Association (ILPA), which Hayes currently chairs.

Hayes, who joined CalPERS in 1998, ruffled feathers in 2002 when as head of ILPA he advocated that VCs adopt a cash in/cash out standard for calculating private equity returns.

Hayes will step down June 30 when California’s fiscal year comes to a close. No one has been named to fill his shoes yet.

CalPERS’ investment committee takes a summer recess and meets again in August.