California Public Employees' Retirement System generated almost half a billion from sales of private equity fund stakes in the second half of last year, as it continued its cull of ties with external managers.
The US's largest public pension disposed of interests in 26 funds spanning 16 managers in a sale that brought in gross proceeds of around $434 million, according to a report by the Pension Consulting Alliance, prepared for its upcoming investment committee meeting show on CalPERS’s second half private equity programme performance.
The sale comes after the pension's disposal of 46 fund interests representing more than $2 billion worth of capital commitments in fiscal 2016. That sale brought in around $450 million in proceeds and reduced ties with 24 managers, as sister title Secondaries Investor reported in August.
CalPERS had relationships with 81 private equity managers on 31 December, according to its latest CIO Performance Report. The pension had relationships with 94 as of the end of June.
Managers the pension no longer has private equity relationships with include Aurora Capital Group, Bastion Capital, Granite Global Ventures, Levine Leichtman Capital Partners and Lombard Investments.
The pension has previously said it wants to reduce this number to 30.
Secondaries fell to account for 1 percent of CalPERS's private equity programme's net asset value as of the end of December, the report noted. The strategy had previously accounted for 3 percent as of the end of June.
CalPERS is still below its target allocation to private equity: the asset class accounts for 8.4 percent of its total portfolio. The interim target is 8 percent and the long-term target is 12 percent.
Returns for its private equity programme were below its PE Program Policy Benchmark across 1-year, 3-year, 5-year and 10-year timeframes.
CalPERS’ private equity programme’s five largest GP relationships represent about 32 percent of net exposure, defined as cost plus unfunded commitments, across 75 active investments, according to the report. Buyout represented the majority of the pension's private equity portfolio, accounting for 59 percent of NAV. The figure is below the 60 percent target.
Below is a list of private equity managers who disappeared from CalPERS' chief investment officer reports between June and December. It is not clear if funds managed by these GPs were included in CalPERS's second half sale.
• Alta California Partners
• Alta Partners
• American River Ventures
• Aurora Capital Group
• Bank of America
• Bastion Capital
• Crimson Capital China
• Garage Ventures
• Granite Global Ventures
• Levine Leichtman Capital Partners
• Lombard Investments
• Riverstone Global Energy
• Standard Life
• Technology Partners
• The Resolute Fund