The $8 billion
Pasadena-based Caltech needs someone to oversee the investment decision-making process for the endowment’s private equity portfolio, which includes domestic and international venture capital and buyout funds, as well as distressed investments. Caltech’s alternative assets portfolio stands at about $850 million.
The director is expected to contribute to “the exploration and development of emerging areas of investment (for example, secondary private equity market, infrastructure, Asia, distressed debt, etc.),” according to the job description.
Caltech’s past commitments have gone to fund-of-funds manager Adams Street Partners and buyout shops Advent International, First Reserve Corp., Thomas H. Lee Partners and Welsh Carson Anderson & Stowe.
Meanwhile, Los Angeles-based California Endowment, a private, statewide health care endowment, is looking for a CIO to help the organization find new investments, especially private equity opportunities. René Goupillaud, who departed last year, previously held the position. —Nancy Gordon
San Diego LP pledges to drug fund
The pension fund has pledged to health care-related venture capital vehicles since 1997. But recently its staff began exploring intellectual-property funds and identified Drug Royalty II with help from placement agency Atlantic-Pacific Capital, according to a board document.
Investment Officer Yegin Chen wanted to make the commitment, according to the document, because of the high expected returns from the non-cyclical pharmaceutical industry and predictable cash flows with a low correlation to the equity markets, among other factors.
The LP plans to take a seat on the fund’s advisory committee.
The manager of the fund, Toronto, Ontario-based DRI Capital Inc., plans to invest in pharmaceutical royalty streams stemming from products already sold for several years by major pharmaceutical or biotechnology companies. Roughly half its investments will be in the United States and half in Europe.
Although the firm originally sought $500 million for the fund, $600 million has been gathered so far, according to a source with knowledge of the situation. A second source familiar with the circumstances said that the fund may even reach its hard cap of $700 million. Other backers include Arizona Public Safety Personnel Retirement System, Los Angeles Fire and Police Pensions, Louisiana State Employees Retirement System, New Mexico Educational Retirement Board and San Bernardino County Employees’ Retirement Association. —Nancy Gordon
Colombia’s Proteccion to make PE investments
Proteccion will boost private equity holdings to 10% by 2012 from less than 1% today, CFO Juan Luis Escobar told Bloomberg.
Colombian pension funds are boosting private equity investments to take advantage of a surge in government infrastructure spending aimed at helping pull the South American country out of its first recession in a decade. Buyout funds from Darby Overseas Investments Ltd. and Brookfield Asset Management Inc. are moving into the country and the government said a year ago that it would set up a $500 million fund, Bloomberg reported.
“We can’t buy more stocks, so private equity is the most exciting thing right now,” Escobar said. “We are looking at infrastructure funds that invest in highways, water treatment, waste and airports.”
Proteccion plans to spend half its private equity money on international funds and use the rest for Colombia-focused investments, Escobar said.
UK pension buffer ups alternative assets
The U.K.-based agency that steps in to pay pensions when a firm goes bust has earmarked up to a quarter of its assets to alternatives like hedge fund-style products and private equity as it seeks to boost diversification and returns.
The Pension Protection Fund (PPF) said last week that it would halve its equities exposure as it builds a strategic allocation of 20% to the new asset classes. That allocation could go as high as 25% at times, it said.
Previous exposure to alternative asset classes was limited to 10% in real estate and currency.
PPF Chief Investment Officer Ian McKinlay said the fund was “very deliberately” aiming to differentiate itself from other pension schemes.
“Even though we are investing in private equity and infrastructure we are doing so in a very controlled fashion,” McKinlay said.
He said the allocation would continue to encompass real estate and would also target absolute return funds which use hedge fund-like tactics.
As part of the new investment strategy, the LP has lined up private equity managers to invest in, but he declined to name the funds.
McKinlay said the PPF was looking at ways to mitigate the risks posed by retirees living longer than anticipated. —Cecilia Valente, Reuters