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CalPERS In SEC Probe

The U.S. Securities and Exchange Commission is investigating whether California violated securities laws by failing to disclose the risks attached to its public pension fund, the California Public Employees Retirement System, according to the sister newswire service Reuters, citing a report in the The New York Times.
It is unclear whether investigators are focusing on the failure to disclose risks and the amount of money it might need to cover any shortfall or on any possible conflicts of interest in steering investments to related parties, which is the subject of a separate investigation by the attorney general of California, according to the report. The attorney general in California has accused sham placement agents with bribing pension officials in return for pledges.

CalPERS suffered heavy losses during the Great Recession, with the value of its assets dropping to $160 billion from a peak of $260 billion in 2007 (they have since recovered to about $225 billion), according Reuters. CalPERS is perhaps the most influential investor in private equity funds, committing $1.3 billion to private equity in 2009, and $650 million to four funds in 2010, according to Buyouts (for related story, see p. XX).

China’s PE Market Rebounds In 2010

The private equity market in China, among the most attractive emerging markets for buyout firms, rebounded last year in terms of the number of funds launched and deals rising to record levels, sister newswire service Reuters reported.

Eighty-two China-focused private equity funds were set up, raising 27.6 billion yuan ($4.1 billion), in 2010. It was not clear how many of those funds are managed by U.S.-based sponsors. That was more than double the 12.96 billion yuan raised by 30 funds in 2009, according to the report, which cited Beijing-based fund consultant Zero2ipo. A boom in China’s initial public offering market, as well as China’s support of private investment following the 2007-2009 financial crisis, helped drive the rebound. China was the world’s largest IPO market last year, with 347 companies raising nearly 490 billion yuan.

Morgan Stanley is among the latest U.S. investors seeking to launch a yuan-denominated fund, joining firms such as The Blackstone Group and The Carlyle Group. The bank is partnering with the city of Hangzhou to raise 1.5 billion yuan ($225 million), according to Reuters.