The California Public Employees’ Retirement System reported an annualized loss of -2.3% within its private equity investment portfolio in 2022, while returns across longer-time periods also fell as 10-year annualized gains dipped to -12.4%.
Thanks to the losses totaling $3.1 billion and slower deployment of capital, the second half 2022 saw the program dip below its 13% target, with the majority of assets in remaining in large buyout strategies.
For the second half of 2022, CalPERS investment staff completed 31 commitments totaling $7.5 billion, which was a slowdown from the first half of the year when the team put $9.5 billion to work. According to Meketa’s report to trustees on the program, investment staff has sought to add exposure to growth/expansion and venture strategies in order to complement the existing exposure in large and mega buyouts.
This year, CalPERS faces challenges in building the portfolio as it seeks to put more capital to work. There are, Meketa said, also opportunities given the $457 billion pension fund’s scale, experience, and large investment team. Staff is focused on deploying capital through lower cost investment structures will help mitigate overall fees.
CalPERS private equity investments in the second half was across 31 investments. Selected were: Oak HC/FT Partners V ($200 million); 200 Sequoia Capital China Seed III ($12 million); Sequoia Capital China Venture IX ($32 million); Sequoia Capital China Growth VII ($104 million); Sequoia Capital China Expansion I ($134 million); EQT X ($500 million); Nordic Bear ($350 million); Advent GPE X ($650 million); Redwood Lane Capital ($325 million); Butterfly II ($250 million); Project Endor Co-Investment ($175 million); Project Quail Opportunities ($600 million); Patience DF Holdings ($90 million); Private Investment Partners ($100 million); CD&R XII ($500 million); Project Purse Co-Investment ($20 million); Project Ace Co-Investment ($200 million); Goodwater Fund V ($60 million); Goodwater Infinity III ($40 million); Healthcare and Fintech ($200 million); Project Vision Co-Investment ($100 million); WCAS Spartan Co-Investment ($5 million); Timber Coast Private Opportunities ($300 million); Vitruvian Investment Partnership V ($301 million); DS Opportunities ($301 million); TPG Golden Bear ($100 million); Hellman & Friedman XI ($600 million); Accel-KKR VII ($180 million); BOND III ($75 million); GCM Elevate ($500 million); and TPG NEXT ($500 million).
