CalSTRS adds $250m to emerging managers programme

The $153.7bn retirement system has re-upped $250m with its new and next generation private equity programme, which is managed by Invesco Private Capital.

The California State Teachers’ Retirement System has expanded its new and next generation private equity manager programme by $250 million, the retirement system announced in a statement. The programme is managed by Invesco Private Capital.

CalSTRS launched the program in 2005 with an initial allocation of $100 million and later re-upped $200 million in 2008. The programme now has assets under management totaling $550 million.

To date, the new and next generation programme has generated a negative 1.1 percent net internal rate of return, according to retirement system spokesman Ricardo Duran. 

“The number doesn’t look good, but … they’re early in their lifecycle,” Duran told Private Equity International. “All the investments are in the US, for this portfolio. And we think that there’s an untapped reservoir of talent, and we want to put our money to work in an area that will yield us a return over the long term.”

Invesco Private Capital will consider investments in buyout, venture capital and other private equity funds, according to the release. CalSTRS defines new and emerging funds as general partners who are on their first, second or third institutional fund. 

Invesco Private Capital is a subsidiary of investment management firm Invesco and has invested $4.5 billion across 450 funds since its launch in 1981, according to its website. The private capital team is led by Philip Shaw and Henry Robin, who was also a co-founder of AlpInvest Partners’ New York office. 

CalSTRS is not the only California pension to sport an emerging manager programme. Earlier this year, the California Public Employees’ Retirement System rejected a proposal from longtime programme manager Centinela Capital Partners to lead its emerging manager portfolio. Earlier this year CalPERS hired Credit Suisse to run its emerging managers programme.

Like CalSTRS, CalPERS has maintained an emerging managers portfolio for some time, despite recent efforts to cull their number of general partner relationships. 

New and emerging managers are a way to “maximise CalPERS’ prospects for attaining high returns from top quartile funds”, a spokesperson told Private Equity International in a prior interview. 

“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,” the spokesperson said.