CalPERS Comes Clean on PE Firm Valuations

For the past three months, I’ve been fighting/begging/cajoling/shaming CalPERS to provide carrying values for its investments in Apollo Management, The Carlyle Group and Silver Lake Partners. Not in funds managed by those firms, but rather in the actual management companies.

CalPERS, however, has demurred — arguing that such investments are exempt from the system’s quarterly reporting requirements. Instead, they kept telling me to wait for an annual investment report, whose publication was pushed back from last month until sometime in late March or early April.

Today, however, CalPERS changed its mind. The system sent over the requested info through the end of last June. Sure it’s already eight months out of date, but it still gives us a better sense of what happened to private equity firm values between the middle of 2008 and the middle of 2009. To my knowledge, these numbers have not been published elsewhere.

The oldest of the three investments is in The Carlyle Group, with CalPERS paying $175 million for a 5.5% stake in early 2001. That investment was valued at $242 million as of June 30, 2009 — thus valuing Carlyle at approximately $4.4 billion. Pretty good deal, except when one realizes that CalPERS carried its Carlyle stake at a whopping $925 million as of June 2008 (for a firm value of nearly $17 billion).

In 2007, CalPERS invested around $581 million into Apollo Management, in exchange for around a 9% stake (yes, this was a deal brokered by Al Villalobos). CalPERS reports that the stake was valued at just $124.6 million as of June 30, 2009. This is a major drop from the $412 million carrying value on year earlier, and would value Apollo at around $1.38 billion.

Finally, there is Silver Lake Partners. CalPERS was carrying its $275 million investment at cost in the 2008 report, because it was so new. One year later, that figure dropped to $162.33 million. The position represents a 9.9% ownership stake in Silver Lake, thus valuing the tech-focused firm at around $1.64 billion.

All together, CalPERS invested around $1.03 billion into the three firms (not including individual fund commitments). The aggregate carrying value through last summer was just $528 million…

Earlier Coverage:
Hey CalPERS: Where’s That Investment Report?
We Keep Asking, CalPERS Keeps Saying No