Sunday, May 17, 2009

CalPERS to Up Percent of Investments in PEU's?

Huge pension fund CalPERS is considering an increase from 10 to 15% of its private equity underwriting (PEU) portfolio. Their investment committee will take the issue forward next month. Is the move to accommodate what has occurred or to pave the way for new investments? Calpensions reported:

Private equity is generally regarded as being more risky than stocks. But when the stock market crashed last fall, the CalPERS private equity program apparently held up better than most stocks.

During the year ending last March 31, CalPERS says the value of its AIM private equity fell 19 percent while a stock index plunged 36 percent.

report last week said that CalPERS has invested $41.1 billion in the AIM private equity program since it began in 1990, earning a $14.3 billion profit. The current value of the program is $20 billion.

CalPERS has a commitment totaling $4 billion to 27 different Carlyle Group private equity funds. CalSTRS has a $1.2 billion commitment to three Carlyle funds.

Do the numbers take into account, capital calls PEU's made on CalPERS or the pension fund's dumping of private equity investments? Bloomberg reported:

Washington, D.C.-based Carlyle Group, the world’s second-largest private-equity firm, made $681.3 million of capital calls on the pension fund (CalPERS) in 2008.

How did it all wash out? Carlyle gave New York $20 million to wash its hands regarding a pay to play pension scandal. That's serious soap.