CalPERS adds $1.2bn to private equity

The nation’s largest pension fund, the Sacramento-based California Public Employees’ Retirement System (CalPERS), is still building up its private equity allocations with another $1.2 billion in commitments being done back in October, according to recent board meeting materials.

The $385 billion investment portfolio already has $26 billion in private equity investments and is slightly underweight the retirement system’s target allocation.

Staffers selected three funds that have seen other institutional investor commitments in recent months.

The largest allocation was $600 million to Leonard Green & Partners’ Green Equity Investors VIII, the firm’s latest buyout offering that closed this week with $12 billion in assets. Other investors include the Minnesota State Board of Investment, which committed $150 million to the fund.

CalPERS staffers also selected Leonard Green’s Jade Equity Investors for a $155 million investment, which was part of the fund’s oversubscription leading it to close at $2.75 billion.

Officials also assigned Madison Dearborn Capital Partners VIII a $400 million commitment. This fund was a new allocation in Minnesota too, having received a $100 million mandate from the State Board of Investment. CalPERS previously has invested in two other Madison Dearborn funds putting $150 million and $300 million in 2000 and 2006, respectively.

So far this year, the system’s private equity portfolio has been underperforming its benchmark. According to performance reports through the end of October, CalPERS’ private equity portfolio was up only 3.4% over the last 12 months. Over 10 years, however, the system reports 13% in annualized gains.

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