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CalPERS opens bids for younger GPs as part of $11 bln plan

  • $288 bln pension system seeks new GPs
  • LP deploys $7 bln program
  • CalPERS commits $4 bln to emerging managers

California Public Employees’ Retirement System reiterated plans to target as much as $11 billion to emerging and transition managers by 2020 to tap younger shops with strong potential.

CalPERS planned to open in July a formal solicitation for investment proposals, with an eye on eligible midsized investment managers. Commitments for the transition-manager plan will range from $50 million to $300 million in the real estate and private equity programs and $500 million to $1 billion in its global equity program.

All told, CalPERs plans to commit $7 billion by 2020 to transition managers, which the pension system defines as firms that have demonstrated early-stage success either within its existing emerging-manager program or elsewhere. Meanwhile, CalPERS has committed $4 billion more to its existing emerging-manager program.

The dollar figures for both programs include investments in CalPERS global equity, private equity and real estate portfolios. All told, CalPERS counts $288 billion in assets under management, including a $26.4 billion PE portfolio and a $5 billion infrastructure and forestland program, as of June 24.

Laurie Weir, investment director for targeted investment programs at CalPERS, said in a statement that the emerging-manager and transition-manager programs will help the system generate returns by identifying early funds with strong potential for success while accessing unique investment opportunities that may otherwise be overlooked.

Formally launched in June 2015, the transition-manager program provides a path for managers to build their firms up to a size large enough to compete for entry into the larger, established managers in the CalPERS portfolio.

The pension system reiterated its dollar commitment for the program and laid out deadlines and solicitation requests to support it in conjunction with a visit to Silicon Valley by President Barack Obama in June.

Obama hosted the Global Entrepreneurship Summit on June 22-24 at Stanford University and led a discussion with Facebook co-founder Mark Zuckerberg. (Read a transcript of the event here.)

As of June 30, 2015, CalPERS counted two investment managers within the PE  portion of its transition-manager program, a June presentation by Weir showed. CalPERS committed $75 million to Siris Partners in late 2014 and $113 million to Clearlake Capital Partners in 2015 as part of its early moves into transition managers.

With emerging managers CalPERS reported 68 relationships and 259 investment vehicles. Its emerging-manager AUM totaled $6.2 billion as of June 30, 2015. GCM Grosvenor is adviser for its private equity emerging-manager program.

Action Item: CalPERS update on transition-manager and emerging-managers programs:

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