CalPERS will be starting a new $200 million private equity fund of funds for emerging managers, Real Desrochers, senior portfolio manager for private equity, told the CalPERS investment committee Monday afternoon.
The new fund comes amid criticism from professional organizations representing women- and minority-owned private equity managers, which have been critical of CalPERS saying their members have not been getting enough investment mandates from the $282.9 billion California Public Employees’ Retirement System, Sacramento. The emerging manager groups had been pushing the California Legislature to do an audit of CalPERS’ private equity program. The groups dropped the request after CalPERS agreed to do a review of its emerging managers program. The new fund of funds will focus on high-potential emerging manager private equity funds, he said. Mr. Desrochers expects the search for the new manager to run the fund of funds to begin during the summer. He expects the money to be invested over a four-year period.
The new fund of funds is one of the key initiatives that has come out of that review. CalPERS has three other funds of funds for emerging private equity managers, totaling about $1 billion in assets.
Under California state law, CalPERS cannot pick an emerging manager based on race or gender. Under CalPERS rules, emerging managers are defined as funds having between $500 million and $1 billion that are raising their first or second institutional private equity fund.