CalPERS ‘graduates’ Clearlake

Clearlake was formerly part of the system’s emerging manager programme, but ‘graduated’ from the programme when CalPERS made a $50m commitment to the firm’s third fund.

The California Public Employees’ Retirement System is highlighting the fact that it has ‘graduated’ an investment manager from its emerging manager programme, known as Capital Link Funds.

The system committed $50 million to California-based Clearlake Capital Partners’ Fund III last year, according to a statement from the pension fund that was also posted on its Twitter feed Wednesday. It’s unusual for the system to publicly announce a commitment to a manager, but in this case CalPERS wanted to promote the fact that a firm had left the emerging manager programme for a direct commitment from the system.

“[Clearlake Capital is] … the perfect illustration of what we hope to achieve with our emerging manager programme,” said Réal Desrochers, CalPERS’ senior investment officer for private equity, in the statement. Private Equity International sat down for an exclusive interview with Clearlake co-founder Jose Feliciano in June. Subscribers of Private Equity International magazine can access the article here.

The programme that was established in 2006 strives to generate risk-adjusted investment returns, by selecting funds that have the potential to produce strong investment performance, according to the statement. CalPERS’ programme also seeks investment opportunities that could be overlooked. 

Last year, CalPERS revealed that it hadn’t been happy with the overall performance of its emerging managers, with the group generating a return of only 12.3 percent, compared to a 20 percent return from the total asset class, Private Equity International wrote earlier. 

The system has faced criticism from the private equity emerging manager community, for what it believed was CalPERS’ backing away from the strategy in favour of committing more money to fewer, larger GPs. Last October, sources told PEI that CalPERS hadn’t re-upped with any manager in the programme for 18 months. CalPERS also fired its previous private equity emerging manager fund of funds Centinela Capital Partners, and replaced it with Credit Suisse, last year.

In 2012, the $260 billion system only made 10 commitments, four to new managers including Clearlake, the statement read. Since 2008, CalPERS has deployed $5.2 billion in capital to 23 funds, but in the two years leading up to 2008 $36.7 billion was committed to more than 130 funds, according to the statement. 

But CalPERS pledged $900 million to private equity during the first quarter, including $400 million to both Silver Lake Partners Fund IV and an energy credit separate account with the Blackstone Group’s GSO Capital. The CalPERS Board is currently in the process of reevaluating its asset allocation and plans to vote in December, a CalPERS spokesperson told PEI.