CalPERS backs Japanese turnaround fund

The California fund is backing a $1bn Japanese fund being raised by US turnaround specialist WL Ross.

(PrivateEquityCentral.net) The California Public Employees’ Retirement System (CalPERS) is to invest $200m in a WL Ross fund targeting Japanese turnarounds and receive a 20 per cent stake in the fund’s management.

 

The fund, which will target small, distressed Japanese companies, hopes to raise a total of $1bn, according to The New York Times. The fund, which will begin making investments in May, will be managed jointly with Taiyo Pacific Partners. CalPERS will keep 80 per cent of anything above that benchmark, while WL Ross and Taiyo will divide the remaining 20 per cent.

 

New York-based private equity firm WL Ross manages about $1.6bn of investments in Japan, including three private equity funds and stakes in Japanese companies. Since the 1998 banking crisis in Japan, companies have become more receptive to foreign investors and ideas. Japanese companies have set up independent audit committees and added outside board members. 

 

CalPERS has been an innovator in buying stakes in its GPs. CalPERS has stakes in such firms as Thomas Weisel Partners, The Carlyle Group, Audax Group, Solera Capital, and Texas Pacific Group’s TPG Ventures.

 

Also in March, WL Ross portfolio company 360networks acquired the 16,000-mile US telecommunications network of energy delivery and power generation company Dynegy. The firm plucked 360networks from Chapter 11 bankruptcy protection last October to use it as a platform for consolidation in the telecommunications sector. The firm’s founder, Wilbur Ross, joined 360networks’ board of directors.

 

Since spinning out of Rothschild in April 2000, WL Ross has sponsored more than $1.6bn of private equity and hedge fund commitments. The firm manages the WLR Recovery Fund, Asia Recovery Fund and Asia Recovery Co-Investment Partners, which total approximately $500m and invest in distressed securities around the world.