Centinela loses leader amid FoF shakeout

Cesar Baez, who launched Centinela in 2006, has left the firm. Baez once ran Hicks Muse Tate & Furst’s Latin America fund that had exposure to Argentina prior to the country’s default.

Centinela Capital Partners, an emerging manager-focused fund of funds launched in 2006 with the $400 million backing of the California Public Employees’ Retirement System, has lost its leader.

The founder of the firm, Cesar Baez, has left and Centinela is being run by founding partners Robert Taylor and Fidel Vargas. Baez founded Centinela after working stints at the former Hicks Muse Tate & Furst and another firm he co-founded, Momentum Media Capital, which focused on Hispanic and ethnic media companies in the US.

It’s unclear why Baez left the firm, or when. CalPERS declined to comment, and Centinela would only confirm that Baez left the firm. Centinela’s investment period expired in August, and CalPERS apparently made a decision to not commit any more money to the firm, sources have told Private Equity International.

It’s also not clear if the fund of funds received commitments from investors other than CalPERS. Centinela runs a portfolio for the pension system called the Capital Link Fund, focused on emerging, domestic managers. Managers in the portfolio include Craton Equity Investors I, to which the fund of funds committed $10 million in 2008, and Cressey & Company Fund IV, to which the fund committed $24.7 million in 2009.

Cesar Baez

CalPERS does not provide an aggregate performance tally for the Capital Link Fund, but it does show individual fund numbers as of 31 March. The numbers only go back to 2007, so the funds are generally too young to be able to accurately predict performance.

However, the Integrated Capital Hospitality Fund, a 2009 vintage vehicle that focused on hotel investments in North America, was showing a negative 100 percent internal rate of return with only about $493,000 of the $14.8 million commitment called. The portfolio also includes Vista Equity Partner’s third fund, a 2007 vintage to which CalPERS committed about $30 million, that was producing an almost 30 percent IRR and a 1.9x multiple.

Baez worked for Smith Barney in the 1990s, when he first encountered private equity, according to an interview he did with PEI in 2006. Hicks Muse was one of his clients at the time, he said. “They raised $275 million, which at the time was a pretty sizeable fund.”

Baez worked as a principal at Hicks Muse from 1995 to 2001. During his tenure, he started a Latin America-focused fund that invested more than $2 billion throughout the region. The Hicks Muse Tate & Furst Latin America Fund, which garnered about $1.2 billion in commitments, had exposure to Argentina when the country defaulted in 2002.

Baez then worked as the head of alternative investments at New Jersey’s state pensions system in 2004 for about a year.

A message left on Baez’s voicemail was not returned.

In what could be the beginnings of a potential trend, another specialty fund of funds, EMAlternatives, recently announced it would manage out its existing assets going forward but would not raise any new funds. Nicholas Morriss, one of the founders of the firm, said fund of funds with narrow investment focuses have a hard time raising money in today’s environment, in which limited partners are cutting down the number of relationships and interested more in building relationships with multi-focused managers.