Firms & Funds

Siris, Clearlake are first to win commitments in new program at CalPERS

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calpers
Calpers headquarters is seen in Sacramento, California, October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker (UNITED STATES) - RTXPWO1
  • Siris, Clearlake receive backing through transition program
  • Program invests in mid-sized GPs raising Funds IV-VI
  • CalPERS targets $2 bln of commitments through 2020

Siris Capital Group and Clearlake Capital are the first GPs to qualify for a new California Public Employees’ Retirement System program that directs commitments to firms that have grown too big for its emerging-managers portfolio.

The private equity transition manager portfolio focuses on managers that are too large to qualify for the emerging-manager program, which is managed by Grosvenor Capital Management, but too small to manage the $400 million-plus commitments it allocates to large core managers like Blackstone Group and Cerberus Capital Management.

The transition program, launched in 2015, “was created to create a bridge for existing emerging managers, as well as outside managers, to obtain midsize-level commitments,” said CalPERS spokesman Joe DeAnda in an email.

CalPERS disclosed the GPs’ identities in recently published documents for an update on special investment programs scheduled for its June 13 meeting.

The PE transition manager portfolio was formed with an expectation of committing $2 billion over five years. The program has as much as $400 million to spend this year, according to pension documents.

In late 2014 and early 2015, CalPERS used the program to allocate $188.4 million across three funds managed by Siris and Clearlake, an investment report included in its June meeting materials said.

CalPERS committed $75 million to Siris Partners III, a new relationship, in late 2014. In August, the retirement system split $113.4 million between a pair of Clearlake funds, Clearlake Capital Partners IV and Clearlake Opportunities Partners, both of which are 2015 vintages.

Siris and Clearlake could not immediately be reached for comment.

The retirement system will use the program to commit to firms raising their third through sixth institutional funds, with typical allocations ranging from $50 million to $300 million in size, according to pension documents. The transition plan could include as many as 15 direct relationships with GPs overseen by CalPERS staff.

The transition program could include firms CalPERS previously backed through its Grosvenor-managed emerging-manager portfolio, according to CalPERS documents.

Siris’s previous fund, a $650 million 2012 vintage vehicle, included a $9.3 million commitment from CalPERS’s emerging-manager program.

“The goal is to establish a pipeline of external manager talent,” said Senior Portfolio Manager Laurie Weir during a CalPERS meeting last year.

“While each asset class is different, in each case the manager transition program will provide the opportunity to invest in follow-on funds [for] incrementally larger commitment amounts.”

Action Item: CalPERS June investment meeting materials:  http://bit.ly/1VMM2j2