In Wake of Scrutiny, CalPERS Begins Collecting Data on Carried Interest

CalPERS has come under scrutiny in recent weeks after an exchange between board member JJ Jelnicic and CIO Wylie Tollette revealed the pension fund didn’t have a strong grasp on the amount of carried interest it pays on its private equity portfolio.

Tollette said that carried interest disclosure is an “industry issue” but that CalPERS was attempting to gather the data.

As of early this week, it appears that process has begun.

Reported by Fortune:

Fortune has learned that the pension system yesterday [June 30] sent out emails to all of its private equity fund managers, asking for the amount of carried interest paid — and, separately, the amount of carried interest accrued — by CalPERS since the inception of each private equity fund. The information is due by July 13, with CalPERS asking for detailed supporting documentation that will allow it to “independently recalculate and tie out the amount of carry and management fee.”…

I spent some time on the phone with Ted Eliopoulos, CalPERS chief investment officer, and Wylie Tollette, CalPERS chief operating investment officer (and the person who made the April comments about tracking carried interest). They both said that the timing of the emails were coincidental, and that they were part of a longer-term project in which CalPERS has been developing a robust, in-house reporting and monitoring system for its private equity investments.

So far this year, they added that 94% of their private equity partners have provided information on carried interest paid for distributions in 2015, but that the email requests are intended to fill in that extra 6% and generate historical data. As for why CalPERS only is asking for historical data now, neither one had a terribly good explanation. They stressed the lack of standardized private equity reporting, and that they “are not in the practice of doing back of the envelope math” for a portfolio of around 700 fund relationships.

CalPERS is the country’s largest pension fund and manages $300 billion in assets.

Photo by  rocor via Flickr CC License