CalPERS in $100m PIPE deal

The California pension is backing a vehicle sponsored by consultant Pacific Corporate Group that will buy preferred shares in publicly traded WebMD, an online health services information company.

Pacific Corporate Group, a La Jolla, California private equity consultant, today announced a $100 million (€81 million) investment in publicly traded WebMD, an online information exchange facilitator for the healthcare industry.


The investment is being made through the PCG Corporate Partners Fund, a vehicle managed primarily at the behest of the California Public Employees’ Retirement System.


The private investment in a public entity (PIPE) takes the form of convertible redeemable exchangeable preferred stock.


In a statement, Roger Holstein, chief executive officer of WebMD, said, “CalPERS. . . is one of the largest, most innovative purchasers of healthcare services in the nation. We look forward to the opportunity to benefit from the advice and experience of these strategic partners.”


Since 1999, WebMD’s share price has slumped from a high of more than $100 to its current price near $9 per share.


Terms of the deal give PCG Corporate Partners the right to convert preferred stock to common shares at $9.40 per share. The preferred stock pays no dividends.


CalPERS, with assets worth more than $161 billion, is one of the world’s biggest backers of private equity, although the pension typically invests in the asset class through third-party partnerships.