LP Scorecard: NGEN and Carlyle/Riverstone funds weigh down performance at CalSTRS

The California State Teachers’ Retirement System, celebrated for the success of its private equity portfolio, hasn’t scored hits with every fund. The accompanying table shows the worst funds in its portfolio by IRR, excluding venture capital funds and vintage 2010 funds and younger that may still be in their J-curve days.

NGEN Partners is the hard luck leader of the group with its NGEN II LP. According to CalSTRS, the 2005-vintage environmental and alternative energy-focused fund has generated an IRR of -53.8 percent through September 30, 2014. NGEN believes that the poor performance stems from the array of regulatory upheavals in the alternative energy sector. Hope is not all lost, as the firm still has two companies in the portfolio, giving it a chance to improve.

Next in line with a -28.1 percent IRR is a 2006-vintage joint fund from The Carlyle Group and Riverstone Holidngs. The Carlyle/Riverstone Renewable Energy Infrastructure Fund did not prosper as planned, but it should be noted that the successor fund secured far more capital and is one of the top-performing energy funds in its class. Combined, the two funds operate at a positive rate.

In third place with an IRR at -18.4 percent is Craton Equity Investors I LP. The 2006-vintage is the inaugural fund of Craton Equity Partners, a firm that has since been acquired by the TCW Group.

Rounding out the bottom five performers are two funds from Nogales Investors. In fourth place is Nogales Investors Fund II LP. The firm’s second flagship fund has generated an IRR of -9.8 percent. Following closely behind is Nogales’s 2004-vintage Investitori Associati IV with an IRR of -9.5 percent. The Italian firm focuses on industrial and commercial investments of at least 100 million euros ($111 million).

CalSTRS’s active private equity portfolio has an unweighted average IRR of 11.4 percent. Overall, the retirement system has more than $41.9 billion in committed capital across 293 active funds.