CalPERS launches emerging managers fund

The system is allocating an additional $200m over a four-year time period to a newly appointed fund of funds.

The California Public Employees Retirement System has allocated $200 million to its emerging manager programme to invest in early stage private equity funds with “high potential”, according to a statement from the US pension plan.

CalPERS will use a new fund of funds manager to deploy the capital over four years, with the investment team planning to select the manager later in the year.

The newly allocated capital is in addition to a $100 million commitment by CalPERS’ emerging managers programme in 2012. The same year, the firm adopted its Emerging Manager Five-Year Plan, which aims to provide a strategic framework to guide CalPERS investments and engagement with emerging investment managers.

“This new allocation is a reflection of CalPERS ongoing commitment to emerging and diverse managers,” Ted Eliopoulos, CalPERS interim chief investment officer, said in a statement.

“Our goal is to generate appropriate, risk-adjusted investment returns by identifying early stage funds with strong potential for success.”

The move is a result of its recent evaluation of its emerging manager programme, for which it hired Cambridge Associates to study 10 to 12 emerging managers from CalPERS’ private equity portfolio “in order to identify characteristics that contribute to an emerging manager’s success”, CalPERS said when it launched the review in December.

CalPERS has nearly $12 billion invested with 395 emerging managers across all of its emerging manager programmes, according to the firm.

However, the programme has been at the centre of an ongoing row since 2012.

The system has historically been a big supporter of emerging general partners, but in recent years has slashed its allocation. CalPERS even attracted a lawsuit from Centinela Capital Partners, which used to run CalPERS’ emerging manager programme, for breach of contract and racial discrimination, Private Equity International reported earlier. 

CalPERS is the largest public pension fund in the US, with more than $280 billion in assets. The firm is widely considered one of private equity’s biggest supporters, although recently suffered the loss of its chief investment officer Joe Dear after a battle with prostate cancer. Eliopoulos is acting as chief investment officer while the fund finds a replacement.