CalPERS Releases Carried Interest Data

Calpers

On Tuesday afternoon, CalPERS released long-awaited data on the profits the pension giant shares with its general partners on private equity investments.

The disclosure comes in the wake of controversy this summer generated when CalPERS officials admitted they didn’t closely track the amount of carried interest the pension fund was paying to its general partners.

Now, the numbers are out.

[Click here for carried interest broken out by manager.]

From Reuters:

The nation’s largest public pension, the California Public Employees’ Retirement System, said on Tuesday that it had shared $3.4 billion in profits with external partners of its private equity portfolio from 1990 to June 30, 2015.

CalPERS’ private equity program added $24.2 billion in net gains to the fund over a 25-year period. During the most recent fiscal year 2014-15, the pension fund made $4.1 billion in net gains from private equity, while its external partners earned $700 million in profit-sharing agreements.

[…]

CalPERS, the seventh-largest investor in private equity with roughly one percent of the market, said its private equity earnings were based on $29.3 billion in original investments. Total realized proceeds, meaning return of original investment plus realized net gain, totaled $53.5 billion.

Private equity has the highest net returns in our portfolio,” said Ted Eliopoulos, CalPERS Chief Investment Officer in a statement. The new accounting system “will allow us to more meaningfully examine information received from our external investment partners.”

Private equity returned 8.9 percent to CalPERS in the last fiscal year, compared to 1 percent from public equities and 2.4 percent overall.

Last year, CalPERS lowered its private equity benchmarks because the asset class’ returns had consistently fallen short – leading some observers to question the performance of the pension fund’s PE portfolio.

Others took the view that the benchmarks were simply too aggressive to begin with.

Per Tuesday’s press release, here is how CalPERS’ private equity program has performed over various time horizons:

  • 3-year: 14.1%
  • 5-year: 14.4%
  • 10-year: 11.9%
  • 20-year: 12.3%
  • Since Inception: 11.1%

 

Photo by  rocor via Flickr CC License

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