CalPERS considers giving senior staff extra secondaries powers

The deputy CIO of the US's largest public pension would have authority to buy up to $2bn-worth of fund stakes without investment committee authorisation, documents show.

The California Public Employees’ Retirement System, the largest public pension in the US, has proposed giving its staff more authority to sell stakes on the secondaries market, months after executing the largest-ever portfolio sale.

Under proposals to be discussed at its 19 September investment committee meeting, the pension’s chief investment officer would have the authority to sell $6 billion-worth of private assets without needing approval from CalPERS’ investment committee, according to documents prepared for the meeting.

The deputy CIO would be allowed to sell $4 billion-worth and the managing investment director $2 billion, according to the documents.

It is also proposing giving the deputy CIO authorisation to buy $2 billion of stakes on the secondaries market without authorisation. They were previously not authorised to make any secondaries acquisitions without investment committee approval.

The documents also show that the MID and the CIO would be allowed to purchase $1 billion-worth and $3 billion-worth without committee approval, respectively.

In relation to delegated authority, single-asset secondaries deals would be treated as co-investments, according to the documents. Under the proposals, the new CIO is allowed to make $1.5 billion of co-investments without committee approval.

It is not clear from the documents why these changes have been proposed.

Some US pensions are allowed to make small secondaries purchases, while others have dedicated investment teams. The Los Angeles County Employees Retirement Association, for example, has been an active backer of deals in recent months, including transactions with Adelis Equity PartnersGHO Capital Partners and Accel-KKR, as Secondaries Investor has reported.

Over the summer, CalPERS sold $6 billion of private equity stakes to buyers include Lexington Partners and Glendower Capital at a discount as much as 10 percent of net asset value, as Secondaries Investor reported. The sale coincides with CalPERS’ shift from holding a large portfolio of GP relationships to more concentrated interests, separately managed accounts and co-investments.