LP corner, week of Nov. 10, 2008

CalPERS pledges $800M to several funds

The California Public Employees’ Retirement System recently pledged more than $800 million to funds with strategies ranging from Asian growth and Italian buyouts to U.S. energy. Also, the limited partner expanded upon its previous pledges abroad while reducing the size of commitments to domestic funds.

The nation’s largest pension fund, with $233.4 billion in assets under management, CalPERS recently committed $150 million to Carlyle Asia Growth Partners IV, up from a $75 million pledge to the predecessor; $234 million to Clessidra Capital Partners II, up from $61 million; $300 million to First Reserve Fund XII, down from $500 million; and $125 million to Welsh Carson, Anderson & Stowe XI, down from $175 million.

The Carlyle Group is seeking $1 billion for its fourth Asian growth fund to acquire large minority positions in emerging companies in high-growth sectors in China, India, Japan and South Korea. In all, CalPERS has committed $3.5 billion to various funds of The Carlyle Group, representing 7.1% of its private equity portfolio. Carlyle Asia Growth Partners III (2005 vintage), to which CalPERS committed $75 million, had an IRR of 30.5% as of Dec. 31, 2007, and an investment multiple of 1.2x, according to the LP.

This latest round of pledges follows a recent report in The Wall Street Journal that CalPERS has been selling stock, despite the weakness in the public markets, to meet its cash obligations to investment firms. When asked about the Wall Street Journal story, spokesperson Pat Macht said, “We always have capital calls for our investment programs and we always manage our cash as appropriate.” —Nancy Gordon

LA Fire & Police has plenty to spend on PE

The Los Angeles Fire & Police Pension System remains below its target allocation for private equity despite a recent pair of pledges totaling nearly $50 million.

The limited partner, which has roughly $13.3 billion in assets under management, has a target allocation to private equity of 10 percent. To reach that goal, its board has already committed $1.7 billion to the asset class, but it still needs to pledge about $340 million more to reach the target.

The latest round of commitments includes $27 million to Paris-based LBO France’s White Knight VIII fund. The firm, which was formed in 1985 and acquires majority stakes in its deals, is targeting the fund at $1.5 billion for investments in mid-market buyouts of French multinational companies.

LBO France funds have generated a gross IRR of 57.5% and a 1.6x investment multiple since 1998, according to board documents.

The city pension fund has also made a $20 million commitment to Thoma Bravo Fund IX. Thoma Bravo intends to raise $800 million for the fund to acquire mid-sized companies in the software and services industries. The firm was founded in 2007 when Carl Thoma and Orlando Bravo, the two partners, left Chicago-based buyout shop Thoma Cressey Bravo. —Nancy Gordon

NJ Pledges $75M to Swiss FoF

The New Jersey State Investment Council recently confirmed its high regard for opportunities in the secondary market with a $75 million commitment to Swiss funds-of-funds manager Partners Group.

The pledge to Partners Group Secondary Fund 2008 follows a $50 million commitment to the firm’s previous secondary fund, Partners Group Secondary 2006.

Partners Group, a Baar-Zug, Switzerland-based firm, seeks to acquire European secondary investments in funds from two to four years old that have from 40% to 70% of their capital drawn. The firm is looking to raise $2.5 billion for fund II. The Pennsylvania Public School Employees’ Retirement System committed up to $190 million to the fund earlier this year. —Nancy Gordon