CalPERS to launch directs programme – updated

The programme – which will comprise two funds and launch in the first half of next year – could drive the fund's annual PE deployment to $13bn.

The California Public Employees’ Retirement System, the US’s largest public pension, has announced plans to launch a direct private equity programme that will see its total annual deployment for the asset class reach up to $13 billion.

CalPERS Direct will comprise two funds: one focusing on late-stage investments in technology, life sciences and healthcare, and the other on long-term investments in established companies, according to a statement.

The programme is scheduled to launch in the first half of next year, pending final review and approval by its board.

The decision follows more than a year of discussions and examination by its board and investment office.

“We need to think differently about how we invest so that we can generate the returns that we need,” chief executive Marcie Frost said. “Our members and employers need us to be focused on strong risk-adjusted returns and growing our funded status, and this approach does just that.”

CalPERS will deploy up to $13 billion annually in private equity, including through the new programme, to achieve a 10 percent allocation. The direct strategy will operate alongside CalPERS’ existing private equity structure, which typically invests in co-mingled funds.

CalPERS’ total fund market value stands at approximately $349 billion, according to the statement.

On Monday CalPERS’ chief investment officer, Ted Eliopoulos, announced he is stepping down for family reasons at the beginning of 2019. His departure is the latest in a number of senior leadership changes recently; the pension’s new chief operating investment officer, Elisabeth Bourqui, started her position on Monday, replacing Wylie Tollette, who left CalPERS in January to return to mutual fund giant Franklin Templeton Investments.

– This report was updated to reflect that the $13 billion figure will apply to CalPERS’ entire annual private equity deployment, rather than strictly its directs programme.