CalPERS agrees to performance data publication

(PrivateEquityCentral.net) CalPERS will release the internal rates of returns (IRR) for each of the pension fund’s private equity funds in order to settle a lawsuit with the San Jose Mercury News. The pension will also include the date the investment was made, the capital committed, and the cash returned to the pension as profit.

CalPERS will retroactively release the data for the quarters ended June 30, and September 30, 2002. It will also release data for the quarters to end December 31, 2002 and March 30, 2003. The pension will not release information about portfolio companies.CalPERS will release the data publicly and post it on its web site at www.calpers.ca.gov in accordance with the trial court’s entry of a stipulated judgment.

“Ending this lawsuit frees us to work proactively on developing an industry standard for private equity reporting that allows us to do our fiduciary duty and provide maximum transparency,” William Crist, president of the CalPERS Board of Administration, said in the statement. “We intend to work with other institutional investors, the private equity industry and the public to develop the best reporting standards. The goal of these standards is to meet the needs of public disclosure without creating a chilling effect on our ability to access and evaluate private equity investments.” 

The settlement comes less than two weeks after California State Teachers’ Retirement Fund decided to release the performance results of its private equity and venture capital investments. Both pensions were forced to respond after the San Jose Mercury News filed a request for the information in October. CalSTRS sent an e-mail in November to the partnerships it has invested in stating that it will release their return data, despite the fact that many of the partnerships have confidentiality clauses. The pension gave its funds until December 2 to provide written notification of why they think those confidentiality clauses would prevent CalSTRS from releasing the information. CalSTRS said it would then discuss the funds’ concerns before releasing the information, which could happen as early as next week.

CalPERS began posting quarterly performance data on its private equity partnerships in October 2000. At the time, the fund listed 143 fund partnerships. The reports, which listed the internal rates of return (IRR) to December 2000 for every fund in which the pension invested since the private equity program began in 1990, were prepared by private equity advisor Hamilton Lane. The pension took the information off of its Web site after GPs complained.

The two California pensions are not the only major institutions coming under pressure to provide greater transparency.

In September, the nine-member board of directors of The University of Texas Investment Management Co (UTIMCO), which manages roughly $14bn on behalf of the University of Texas System, voted unanimously to make publicly available detailed performance data, including valuation estimates and rates of return, on its roughly 130 private equity funds after the Houston Chronicle and several state politicians objected to its policy of non-disclosure for private equity fund returns.

Another institution feeling the heat is the Massachusetts’ Pension Reserves Investment Management Board (MassPRIM), which has approximately 6 per cent of its $27bn in assets committed to private equity. MassPRIM has been approached by two groups with a request to disclose the data under Massachusetts’ Freedom of Information Act.