Side Letter: CalPERS’ new PE head, Europe disruptors, Ardian snags biggest secondaries haul

CalPERS hires Altamont Capital exec to lead PE, European VC gives the US a run for its money, Ardian turns Japanese. Here’s today's brief, for our valued subscribers only.

Just happened

New sheriff in town

Greg Ruiz (pictured) is joining the California Public Employees’ Retirement System as managing investment director for private equity, filling a role that has been without a permanent occupant since Réal Desrochers left two years ago. The pension plan was holding off on recruiting for Desrochers’ replacement until it specified its new private equity strategy, we reported in 2017. Ruiz will join in the summer from Palo Alto-based Altamont Capital Partners.

Europe disrupting

Europe is giving Silicon Valley a run for its money when it comes to launching global technology platforms – and PE is paying attention. Last year VC funding on the continent broke records with close to €20 billion of deals, while 14 start-ups hit “unicorn” status, per PitchBook. Performance is feeding investor appetite: Europe’s VC returns in 2014-16 were almost on par with the US, according to investment data platform Burgiss. Signs the region is becoming an important destination for investors looking for the next disruptor.

Ardian snags $5bn in secondaries

Secondaries powerhouse Ardian has emerged as the buyer of Norinchukin Bank’s colossal $5 billion portfolio of LP interests, per sister title Buyouts. The portfolio is largely unfunded – around 75 percent, as sister title Secondaries Investor reported – and contains a mix of assets, including mega-buyout funds and real-assets funds. The deal comes as Ardian is raising what could be the largest-ever secondaries fund.


Stay sharp, lenders. Don’t be fooled by a benign economic backdrop: it’s at precisely moments like these that lofty expectations and shoddy underwriting cause once-promising portfolio companies to lose their balance, writes sister publication Private Debt Investor. The US economy is humming along – the job market is at or near full employment, wages are rising, the sun is shining, and few see any potential storms on the horizon. But that’s not a reason for mid-market lenders and buyout shops to let their guard down.

A (healthier) staple diet. Stapled secondaries deals can help fundraises over the line or give them a kick-start, but how do you deal with potential conflicts of interest, particularly when the SEC is breathing down your neck? High pricing, fairness opinions and disclosure, say the three lawyers Secondaries Investor gathered for its latest podcast. One unusual development: it’s not GPs but limited partner advisory committees which are increasingly pushing for fairness opinions. The main reason is they’re aware other LPs look to them for approval that a process is conflict-free, and they want to pass on some of the responsibility.

LBO blues. A sell-off in the leveraged loan market has contributed to a decline in European private equity dealmaking, according to PitchBook’s latest European PE Breakdown. Firms spent €65.7 billion across 674 deals in Q1 2019, down 26.8 percent and 34.2 percent year-on-year respectively. Many fund managers have postponed deals due to a recent dip in secondary market pricing for leveraged loans and high-yield bonds, which made financing costs overly burdensome during much of the quarter, the report said. Less than 1 percent of loans were trading at par or higher in Q4 2018, the lowest such share since April 2009 and down from 64 percent at the end of September, according to LCD, part of S&P Global Market Intelligence.

Inside tip

Americas senior editor Isobel Markham will be on stage tomorrow at PEI’s Private Fund Compliance Forum in New York in conversation with the SEC’s Marc Berger. Anything you want us to ask? She’d love to hear from you.

Dig deeper

Ruiz is joining CalPERS at a time of great change; after 18 months of discussions and revisions, in March the pension plan’s investment committee approved “in concept” the addition of two “direct” private equity strategies to its strategic business model. Here’s a breakdown of the $360 billion pension plan’s alternatives allocations. For more information on CalSTRS, as well as more than 6,700 other institutions, check out the PEI database.

He said it

“We should find better success measures. We haven’t got time to wait for the perfect regulation and benchmarks.”

Mark Walker, CIO of Coal Pension Trustees Services, tells delegates at the CFA Annual Institute Annual Conference in London that if he could fix one thing in the system, it would be benchmarks.

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Today’s letter was prepared by Isobel MarkhamAdam LeAlex LynnCarmela Mendoza.

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