New CalPERS CIO comes from New Zealand fund with small PE portfolio

It remains to be seen how the appointment of Stephen Gilmore as California Public Employees’ Retirement System’s new CIO – announced today – will affect the pension’s ambitious overhaul of its private equity program.

CalPERS last month approved the increase of its private equity target to 17 percent from 13 percent, a move that was made while the system was still interviewing potential CIO candidates.

An investment committee member said at its March meeting that all of the finalists for the CIO job were supportive of the system’s steep hike of its target, a move that should make available billions of fundraising dollars over the next several years.

Gilmore worked as the CIO of New Zealand Superannuation Fund before accepting the position at CalPERS. While one of the world’s top performing sovereign wealth funds, NZ Super has a scant private equity program.

According to its website, NZ Super allocates 4 percent of its total fund to private equity, resulting in a portfolio valued around $1.7 billion in US dollars, similar in size to Ohio Police & Fire Pension Fund.

Buyouts’ database shows that CalPERS’ private equity portfolio is valued at $68.5 billion while still being underweight to its new 17 percent target, for comparison.

In addition to the recent hike of its target, CalPERS took several other steps under former CIO Nicole Musicco to change its private equity portfolio, including the creation of an internal committee to consider direct deals.

NZ Super has made several direct deals over the years, ranging from infrastructure and timber holdings to an investment in Illinois-based carbon recycling company LanzaTech.

While NZ Super has a small private equity allocation, Gilmore previously served as the chief investment strategist at Australia Future Fund, which has a $22 billion private equity portfolio, according to PEI’s latest Global Investor 100 ranking.