Between $11 billion and $18 billion – that’s the range the California Public Employees’ Retirement System estimated its decision to put its private equity programme on hold for 10 years could have cost the US’s largest public pension in lost gains.
Speaking in September, at a September investment committee meeting, chief investment officer Nicole Musicco programme acknowledged the pension was drawing lessons from a “lost decade” in which it has underinvested in the asset class.
“We have more room to do more with private equity since we were late to the game,” she said.
Two months on and CalPERS has enacted on plans to turn that around. On Tuesday, the pension said it had put Anton Orlich, an investment professional who rejoined CalPERS in October as managing investment director for growth and innovation, in charge of its revamped private equity programme. The pension is merging its growth and innovation programme with its private equity unit under Orlich.
He succeeds outgoing private equity head Greg Ruiz, who joined multi-family office Jasper Ridge Partners this month.
Orlich, who spent two years as a US Navy intelligence officer in Afghanistan prior to joining Kaiser Permanente, a US healthcare provider and non-profit health plan formed in 1945, will have his work cut out at CalPERS. Fortunately, he knows a thing or two about expanding PE programmes at rapid pace. Kaiser made its debut on Private Equity International’s Global Investor 100 ranking this year in 15th place, making it the fifth-biggest US institutional investor by exposure to the asset class, behind CalPERS, the California State Teachers’ Retirement System, Washington State Investment Board and Teacher Retirement System of Texas.
Kaiser has been a relative newcomer to private equity, only launching a formal investment programme for the asset class in 2019. Since then, as head of alternative investments, Orlich oversaw the plan growing its private equity assets under management from $6 billion to $33 billion. This brought its exposure from 8 percent of the overall portfolio to 28 percent, giving it the 14th-highest percentage allocation on the GI 100 ranking.
These efforts included backing first-time funds and targeting a diverse group of relationships, with more than 50 percent of its new managers since 2019 being women-owned businesses and 25 percent being minority-owned.
It is telling that Orlich, whose immediate task is to grow CalPERS’ private equity assets from 8 percent to 13 percent, was initially responsible for ramping up the pension’s growth equity and venture capital portfolio. He has pedigree building out such a franchise, having committed $1.5 billion to venture capital alone in the 12 months to end-October last year while at Kaiser, and may seek to replicate these efforts at his new employer.
“Anton is a very decisive person,” a GP who has worked alongside Kaiser told PEI in July. “If he believes in something, he does it.”
Another market source who has worked with Orlich described him as “quick on his feet” and someone who comes to decisions quickly.
“He’s direct, decisive and hard-charging,” the person told PEI.
Sacramento-headquartered CalPERS’ radical overhaul will involve a greater focus on cost savings though co-investments and direct investments; committing and deploying capital across market and economic cycles; and diversifying new assets across vintage years, economic sectors and corporate growth stage. It has freed up liquidity for these efforts via a multi-billion portfolio sale earlier this year, affiliate title Buyouts reported.
Orlich is expected to focus on ramping up the pension’s activity in growth equity and venture capital funds, according to the source who has worked with him. He will also likely consider building up the pension’s secondaries buyside capabilities, the person added.
A spokeswoman for CalPERS declined to comment on Orlich’s plans beyond the statement about his appointment.
– This report was updated to show the amount CalPERS estimated it may have lost by holding back on its private equity programme is between $11 billion and $18 billion.
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