CalPERS buys $600m stake in Apollo(2)

The US' largest pension fund purchased a $600 million, 8.6 percent stake in Apollo, prior to the private equity firm's listing on Goldman Sachs' private exchange.

The California Public Employees’ Retirement System has again purchased a stake in a private equity firm: in July it bought a $600 million (€434 million) stake in Apollo Management Group, and has approval to increase its stake to $700 million, according to recently released investment committee minutes.

In the agenda for its 10 September meeting, the pension fund disclosed that it had approved up to a $700 million private placement, or 10 percent stake, in Apollo's management company, prior to Apollo's flotation on Goldman Sachs' GSTrUE private exchange, where it reportedly raised $828 million. The pension fund ultimately invested $600 million in the firm in July.

A spokesman for the pension fund told PEO last week that it does not disclose its stakes in private equity partners, save for the 5.5 percent stake in purchased in The Carlyle Group in 2001.

CalPERS also took a $60 million equity stake in TPG Ventures in 2001, as did the California State Teachers’ Retirement System and Oregon’s Public Employees Retirement Fund.

Apollo is not the first private equity firm to sell a stake in a private placement ahead of a listing. In May, The Blackstone Group sold a 10 percent, $3 billion stake to the Chinese state before its June initial public offering, and Fortress Investment Group sold a 15 percent, $888 million stake to Tokyo-based investment bank Nomura Holdings ahead of its February initial public offering. In May, a source told PEO that TPG is considering selling a “single-digit” stake to its pension fund clients.