CalPERS’s head of private equity to depart

Réal Desrochers, who has been the managing investment director of the private equity programme at the California Public Employees’ Retirement System (CalPERS) for the past six years, is leaving the pension plan at the end of the week.

CalPERS, which has about 8.5 percent of its total assets, or $26 billion, in private equity, said in a statement on Wednesday that Desrochers’ last day will be on Friday and that he is taking a position with a large overseas bank whose name was undisclosed.

Sarah Corr, an investment director in private equity at CalPERS, will become the interim head of the programme, CalPERS said. It is unclear whether the search for a permanent replacement has started.

Desrochers joined CalPERS in May 2011 from the Saudi Arabian Investment Company, where he served as chief investment officer. He previously served for 11 years for the California State Teachers’ Retirement System managing the private equity portfolio there. He began his career at the Caisse de dépôt and placement du Quebec in his native Canada, according to his LinkedIn profile.

During his tenure at CalPERS, the pension has made efforts to reduce costs within the private equity portfolio, including by cutting the number of external managers it has relationships with. 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.

“Because of him, we’ve been able to streamline the number of managers we work with, while at the same time negotiating much more favourable terms with our business partners,” said Ted Eliopoulos, CalPERS’s CIO, in the statement.

CalPERS has successfully tapped the secondaries market several times over the past few years to reduce the number of relationships with general partners while committing larger amount of capital to certain managers.

Eliopoulos said in the statement that the pension will continue to review possible new business models and will also continue to reduce the number of general partenrs it does business with.

“Réal has also been instrumental in moving the private equity industry to become much more open by adopting a standardised approach to reporting fees,” Eliopoulos added.

Private equity has been CalPERS’s best performing asset class over the past 10 and 20 years, returning 9.9 percent and 11.2 percent respectively as of 31 January, the pension plan said in the statement. For the past five years, it returned a net 11.8 percent.

In a 2013 interview with sister publication Private Equity International, Desrochers had said reducing the number of managers it has relationships with was a key priority.

“We want to be more selective: we want to make larger commitments to a smaller number of managers. So how do you decide [which to keep]? It’s all about consistency of performance and good governance. We want to try and build a core portfolio of managers that are institutional quality, and be a long-term investor with them,” he said.

Desrochers and CalPERS were not immediately available for comment.

Click here to read PEI‘s 2013 interview with Desrochers.