LP Scorecard: How CalPERS’ Asia Funds Are Faring

The $255 billion state pension fund is invested in some 26 Asia-focused funds ranging in vintage year from 2000 to 2012. This also includes Asia-focused funds from its underlying fund-of-funds vehicles. Of this fund selection median IRR and multiple was 8.45 percent and 1.35x for the period, top quartile was 15.05 per cent and 1.5x and bottom quartile was -1.35 percent and 1x. This compares with the median, top and bottom quartiles of CalPERS’s entire private equity portfolio, which were 9.05 percent and 1.3x; 16.7 percent and 1.6x, and 3.4 percent and 1.1x, respectively.

The top performer of in this scorecard is the 2003 vintage Newbridge Asia III LP which posted an IRR of 30.8 percent and multiple of 4.3x. The 2008 vintage California Asia Investors LP came in second place with a 29.6 percent IRR and 1.5x multiple and Newbridge Partners featured again in third place with its 2005 vintage Newbridge Asia IV LP posting an IRR of 20.7 percent and multiple of 2.3x.

Carlyle Group also features in the top five coming in fourth place with its 2000 vintage Carlyle Asia Partners (PV II) LP posting an IRR of 18.3 percent and multiple of 2.7x. However, Carlyle also features twice in the bottom five performers of this scorecard with its 2008 vintage Carlyle Asia Partners III LP posting an IRR of -4.9 percent and multiple of 0.9x and its 2005 vintage Carlyle Asia Growth Partners III LP at the bottom of the rankings with a -6.4 percent IRR and 0.7x multiple. On a positive note, Carlyle comes top of the country-focused Asian fund rankings with its 2001 Japanese-focused Carlyle Japan Partners LP which posted a 34.1 percent IRR and 2.3x multiple .

According to Buyouts, Carlyle recently announced plans to raise $3.5 billion for a fourth Asia fund Carlyle Asia Partners IV LP. And Reuters also reported the firm has hired a former UBS banker to launch an Indonesia office, becoming the first major private equity firm to set up shop on its own in Southeast Asia’s largest economy, Reuters wrote.

Also hiring in Asia is Kohlberg Kravis Roberts & Co., which has recruited Hirofumi Hirano from AlixPartners Asia LLC to serve as chief executive officer of KKR Japan as it expands its presence in the country. And Advent International has opened its first office in China to take advantage of investment opportunities in the country, according to Reuters.

Indeed, Ernst & Young’s Asia Pacific Private Equity Outlook reveals Greater China looks set to remain the most active market in Asia in 2013.

Altogether CalPERS has backed some 277 funds spanning vintages 1991 to 2012, showcasing an extremely diversified and sophisticated portfolio. According to CalPERS, investments can be in any industry or geography and may include buyouts or corporate restructuring; expansion capital; venture capital; credit related and opportunistic investments. The pension fund also has exposure to the asset class through various funds of funds. Within its private equity portfolio the sub-asset class allocation targets are as follows: buyouts 60 percent; credit-related 15 percent; venture capital 1 percent; growth/expansion 15 percent; opportunistic 10 percent.

Prominent global private equity fund managers backed by CalPERS include Apollo Global ManagementThe Blackstone Group, Coller Capital, Lexington Partners and TPG Capital, along with Carlyle and KKR. Among the pension fund’s European offerings are funds from Bridgepoint Capital, Candover (now Arle CapitalCVC Capital Partners and Permira. Venture capital fund managers that CalPERS has backed include Insight Venture Partners, Khosla Ventures and Pinnacle Ventures. The pension fund is also exposed to venture through its California Emerging Ventures funds I, II, III and IV vehicles, all captive funds of funds.

Since inception in 1990 to Sept. 30, 2012, its private equity program has generated $21.7 billion in profits for CalPERS.

Below are the top-performing and bottom-performing Asian investments, including those made through funds of funds.

Angela Sormani is a special correspondent for Buyouts in London.

Top Five

5. SB Asia Investment Fund II LP

Vintage: 2005

Multiple: 2.3x

IRR: 16.8 percent

 

4. Carlyle Asia Partners (PV II) LP

Vintage: 2000

Multiple: 2.7x

IRR: 18.3 percent

 

3. Newbridge Asia IV LP

Vintage: 2005

Multiple: 2.3x

IRR: 20.7 percent

 

2. California Asia Investors LP

Vintage: 2008

Multiple: 1.5x

IRR: 29.6 percent

 

1. Newbridge Asia III LP

Vintage: 2003

Multiple: 4.3x

IRR: 30.8 percent

 

Bottom Five

 

5. SAIF Partners IV LP

Vintage: 2010

Multiple: 1x

IRR: -3.3 percent

 

4. TPG Asia V LP

Vintage: 2007

Multiple: 0.9x

IRR: -3.5 percent

 

3. Carlyle Asia Partners III LP

Vintage: 2008

Multiple: 0.9x

IRR: -4.9 percent

 

2. CVC Capital Partners Asia Pacific III LP 1

Vintage: 2008

Multiple: 0.9x

IRR: -5.1percent

 

1. Carlyle Asia Growth Partners III LP

Vintage: 2005

Multiple: 0.7

IRR: -6.4 percent