CalPERS pledges $1bn to Carlyle V(2)

The California pension has made its largest private equity commitment yet disclosed to Carlyle’s fifth US buyout fund, which has a target of as much as $17 billion.

The California Public Employees’ Retirement System has disclosed a $1 billion commitment to Carlyle Partners V, a US buyout fund managed by Washington DC alternatives giant The Carlyle Group.

The commitment is the largest yet disclosed by the $250 billion Sacramento, California-based public pension, which has some $33 billion committed to alternative assets.

Carlyle’s fifth US buyout fund is seeking as much as $17 billion, according to reports.

CalPERS private equity investment staff professionals, led by Leon Shahinian, have told market participants that they plan on making larger commitments to fewer GP groups. In the coming months, market observers expect the pension to make private equity commitments of a magnitude similar to, or surpassing, the Carlyle Partners V commitment.

CalPERS owns a 5.5 percent stake in Carlyle’s management company, purchased in 2000.

According to the CalPERS web site, the pension has committed capital to 18 Carlyle-sponsored private investment funds, totaling some $1.6 billion. The firm has also recently agreed to commit to two new Carlyle vehicles – one targeting infrastructure investments and a new multi-strategy hedge fund.

Shahinian: large commitments to fewer GPs

CalPERS committed $300 million to Carlyle Partners IV, which closed in 2004 on $7.9 billion.

Carlyle’s US buyout group is co-led by Alan Holt, a former MCI Communications executive and principal at Avenir Group, and Dan Akerson, the former chairman and CEO of XO Communications, and before that, Nextel Communications.

CalPERS disclosure documents note that Carlyle’s global buyout group has generated a 32.3 percent gross IRR on a combined basis.

Other limited partners to have committed to Carlyle Partners V include the Indiana Public Employees’ Retirement Fund; Teachers’ Retirement System of the State of Illinois ; Sports Venture Partners; and Alaska Permanent Fund Corporation.