CalPERS seeks emerging manager partnerships

The $239bn pension system has put out a ‘request for information’ for a manager to run an investment vehicle targeting emerging private equity managers.

The California Public Employees’ Retirement System announced this week it is searching for a fund of funds to invest in domestic emerging private equity managers, the pension said in a statement.

CalPERS has issued a “request for information” for an investment vehicle, most likely a fund of funds, to invest in partnerships that “may be under-capitalised”, the pension said.

“Through the manager, we’re looking for partnerships whose principal officers have individual experiences and underlying investment strategies to generate earnings in the top quartile of private equity investments,” said Réal Désrochers, senior investment officer for CalPERS’ Alternative Investment Management Programme (AIM), in the statement.

“This entails partnerships or direct investments, deal sourcing, analysing, screening, due diligence, negotiating and closing transactions, monitoring and exiting investments,” he said.

While most of our investments are with a half-dozen or so major global partners, we want to ensure that we don't overlook emerging managers and their prospects for high rates of growth and performance.

CalPERS spokesperson

The pension is searching for an emerging manager across various private equity strategies, including expansion capital, leveraged buyouts and venture capital.

CalPERS has existing emerging manager investments with other fund of funds-style vehicles in private equity, a pension spokesperson told Private Equity International.

The pension has about $2 billion invested in emerging managers within its AIM programme. These include the Capital Link Fund, a $1 billion vehicle that focuses on domestic emerging managers managed by Centinela Capital Partners; and the California Initiative, which has $1 billion for investments in private companies supported by women and minority owners.

“The overall goal is to maximise CalPERS’ prospects for attaining high returns from top-quartile funds,” the spokesperson said. “While most of our investments are with a half-dozen or so major global partners, we want to ensure that we don’t overlook emerging managers and their prospects for high rates of growth and performance.”

CalPERS’ newly hired head of the AIM programme, Désrochers, has had experience with emerging manager targeted programmes. Désrochers joined CalPERS in May after working for a few years as the chief investment officer at the Saudi Arabian Investment Company. He spent 11 years running private equity at the California State Teachers’ Retirement System.

CalSTRS has had several emerging manager programmes across asset classes, including a partnership with Invesco Private Capital as the manager for its CalSTRS New and Next Generation Manager Fund II, a fund of funds targeting investments with first, second or third institutional funds.