CalPERS Seeks Private Equity Vehicle for Domestic Emerging Managers

(July 12, 2011) — The California Public Employees’ Retirement System (CalPERS) has issued a request for information for investment in a new private equity vehicle for domestic emerging managers.

The $240 billion pension plan, America’s largest, said that it expects that the vehicle will most likely be structured as a customized fund-of-funds to invest in partnerships that may be under-capitalized.

“Through the manager, we’re looking for partnerships whose principal officers have individual experiences and underlying investment strategies to generate earnings in the top quartile of private equity investments,” said Réal Desrochers, Senior Investment Officer for the pension plan’s Alternative Investment Management (AIM) Program. “This entails partnerships or direct investments, deal sourcing, analyzing, screening, due diligence, negotiating and closing transactions, monitoring and exiting investments.”

CalPERS said that it was looking for a 7- to 10-year relationship with the manager and that it would invest across the private equity spectrum, including venture capital, expansion capital, and leverage buyout transactions.

The announcement comes at a sensitive time for the pension fund, as its efforts to advocate environment, social, and governance (ESG) conscious investing have been overshadowed by ongoing headlines about scandal. On June 28, an investigation revealed that CalPERS had paid a Washington, D.C. law firm $11 million to conduct an internal review, raising concerns over unethical practices. The pension plan also drew attention when it recently rehired State Street as its custody bank, even though CalPERS has been involved in a lawsuit against the bank since 2009.