CalPERS’ investment committee is scheduled to decide whether to approve two outside entities as part of its private equity investment model.Arleen Jacobius
CalPERS’ investment committee is scheduled to decide whether to approve two new outside entities as part of its private equity investment model, according to the agenda for the committee’s meeting next week.
Pillar III, one of the portfolios to be managed by an outside entity not controlled but funded by the $354.8 billion California Public Employees’ Retirement System, Sacramento, would make late-stage venture capital and growth equity investments in technology, life sciences and health-care companies, the report to the committee shows.
The other outside entity, Pillar IV, would make long-term investments in core-economy companies.
The two direct portfolios are expected to grow to $10 billion each over a 10-year period.
The investment committee report indicates that one of the risks of Pillars III and IV is that the initial commitment to the strategies would have a “fixed term that is likely shorter than the time to realize returns on their investments.”
CalPERS officials have not yet determined how much the initial commitments to Pillars III and IV will be, spokeswoman Megan White said in an email.
The initial commitment amounts “will be addressed later if (investment) policy changes are required,” she said.
Ms. White added that Pillars III and IV will “ideally have no fixed term, but that too will be determined once mandates and teams are chosen,” she said.
Separately, the committee will consider whether to oppose a proposed legislation that would require CalPERS and California State Teachers’ Retirement System, West Sacramento, to stop investing in private prison companies and to divest from companies that do not transition to another industry by July 1, 2020, subject to the fiduciary duty of the boards.
Staff recommends opposing the bill because it imposes a divestment mandate on CalPERS.
The committee at its March 18 meeting will also consider whether to support a bill requiring CalPERS and CalSTRS to provide annual reports of their investments with emerging managers including in funds-of-funds. CalPERS’ staff recommends supporting the bill if it is amended to remove a requirement that each pension fund identify terminated emerging managers in its report.