California Public Employees’ Retirement System generated almost half a billion dollars from sales of private equity fund stakes in the second half of last year, as it continued its cull of ties with external managers.
The US’s largest public pension disposed of interests in 26 funds spanning 16 managers in a sale that had gross proceeds of around $434 million, according to a report by the Pension Consulting Alliance prepared for CalPERS’s upcoming investment committee meeting.
The sale comes after the pension’s disposal of 46 fund interests representing more than $2 billion worth of capital commitments in fiscal year 2016. That set of transactions brought in around $450 million in proceeds and reduced ties with 24 managers, as Secondaries Investor reported in August.
CalPERS had relationships with 81 private equity managers on 31 December 2016, according to its latest CIO Performance Report, and has previously said it wants to reduce this number to 30.
The institution no longer has private equity relationships with Aurora Capital Group, Bastion Capital, Granite Global Ventures, Levine Leichtman Capital Partners and Lombard Investments, among others.
Secondaries fell to 1 percent of CalPERS’s private equity programme’s net asset value as of the end of December, the report noted. The strategy had accounted for 3 percent as of the end of June.
CalPERS is still below its target allocation to private equity: the asset class accounts for 8.4 percent of its total portfolio. The interim target is 8 percent and the long-term target is 12 percent.
Returns for its private equity programme were below its PE Program Policy Benchmark across 1-year, 3-year, 5-year and 10-year time frames.
CalPERS’s private equity programme’s five largest GP relationships represent about 32 percent of net exposure – defined as cost plus unfunded commitments – across 75 active investments. Buyout represented the majority of the pension’s private equity portfolio, accounting for 59 percent of NAV. The figure is below the 60 percent target.
Below is a list of private equity managers who disappeared from CalPERS’s chief investment officer reports between June and December. It is not clear if funds managed by these GPs were included in the second half sale.
- Alta California Partners
- Alta Partners
- American River Ventures
- Aurora Capital Group
- Bank of America
- Bastion Capital
- Crimson Capital China
- Garage Ventures
- Granite Global Ventures
- Levine Leichtman Capital Partners
- Lombard Investments
- Riverstone Global Energy
- Standard Life
- Technology Partners
- The Resolute Fund