private equity | Pension360

Timothy Geithner To Speak at New Jersey Pension Meeting

Ex-U.S. Secretary of Treasury Timothy Geithner will speak at Thursday’s meeting of the New Jersey State Investment Council, the entity that oversees the state’s pension investments.

From NJ.com:

Geithner is president of private equity firm Warburg Pincus, which counts New Jersey as a client.

“It’s an important relationship for them, and it’s certainly an important relationship for us,” said Tom Byrne, vice chairman of the investment council.

Watchdogs are hoping the meeting will also mark the release of a long-awaited audit into the potential pay-to-play violations of Charlie Baker.

From NJ.com:

Seven months before the state decided to invest $15 million from its pension fund with the firm General Catalyst, which listed Baker as an “entrepreneur in residence,” Baker had donated $10,000 to the New Jersey Republican Senate Committee. The state has since sold its investment with the firm.

The results of the audit have been delayed for months. The investment council announced the audit in May, saying it was expected to take several weeks.

The meeting agenda can be read here.

Video: African Pension Funds Diving into Private Equity

Here’s a panel discussion on the rise of private equity as an investment option for African pension funds. The discussion was held in January at an event sponsored by the Africonomie Group – but the footage was released this week.

From the video description:

Africa pension funds remain underweight in private equity due to restrictive allocations caps that limit or hinder investments into Africa PE funds. However this trend is changing, buoyed by increases in asset under management and better understanding of PE strategies – appetite for PE is growing. This interactive session explores innovative approaches to mainstreaming PE strategies in pensions portfolio.

Preqin Tells Private Equity to Heed the “Power of the Limited Partner” After CalPERS’ Cuts

Research firm Preqin has released a note reacting to CalPERS’ cutting of private equity managers.

The firm notes that limited partners are beginning to wield more negotiating power, and cautions private equity firms to consider CalPERS’ actions an “effective statement” on the power of limited partners.

Canada Pension Plan Investment Board Announces Series of Executive Appointments

The CPPIB is welcoming two executives into new posts and saying goodbye to another this week.

The board has appointed or promoted two new Senior Managing Directors, one of whom will replace a departing Managing Director as Global Head of Private Investments.

More details from a release:

Mark Wiseman, President & Chief Executive Officer, Canada Pension Plan Investment Board (CPPIB), is pleased to announce the following senior executive appointments:

* Mark Jenkins is promoted to Senior Managing Director & Global Head of Private Investments responsible for leading the direct private equity, infrastructure, principal credit investments, natural resources and portfolio value creation functions. Mr. Jenkins, who becomes a member of CPPIB’s Senior Management Team, joined CPPIB in 2008 and most recently held the role of Managing Director, Head of Principal Investments.

* Pierre Lavallée is appointed to the new role of Senior Managing Director & Global Head of Investment Partnerships. Mr. Lavallée will lead this new investment department to focus on broadening relationships with CPPIB’s external managers in private and public market funds, secondaries and co-investments, expanding direct private equity investments in Asia and further building thematic investing capabilities. Mr. Lavallée, who joined CPPIB in 2012, will continue in his current role as Senior Managing Director & Chief Talent Officer until a successor is appointed.

These appointments are effective immediately.

Mr. Wiseman also announced today that André Bourbonnais will be leaving CPPIB to assume the role of Chief Executive Officer at the Public Sector Pension Investment Board in Montreal, effective March 30, 2015. Mr. Bourbonnais joined CPPIB in 2006 and was most recently Senior Managing Director & Global Head of Private Investments.

You can read the biographies of the new Senior Managing Directors here.

Photo credit: “Canada blank map” by Lokal_Profil image cut to remove USA by Paul Robinson – Vector map BlankMap-USA-states-Canada-provinces.svg.Modified by Lokal_Profil. Licensed under CC BY-SA 2.5 via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Canada_blank_map.svg#mediaviewer/File:Canada_blank_map.svg

It’s Hard to Find a Good Deal When Everything is This Expensive, Says Ontario Teachers’ Pension CEO

The CEO of the Ontario Teachers’ Pension Plan, Ron Mock, spoke at the World Economic Forum last week. One of the topics he touched on was how hard it is to find bargains in the current market, where “everything is expensive” and deals can turn into “non-stop auctions”.

KKR Refunds Investors for Wrongly-Charged Fees

In response to an SEC examination, private equity firm KKR & Co. has refunded some fees it charged investors in a handful of its funds.

The SEC last year said that some firms were charging investors “hidden fees” without proper disclosure.

From the Wall Street Journal:

KKR’s refunds were disclosed in a pension-fund document obtained by The Wall Street Journal through an open-records request. The precise amount of the refunds couldn’t be determined, but a Journal analysis suggests one set of refunds likely amounted to less than $10 million, while the other may have been similar in size or smaller.

KKR declined to comment on its discussions with regulators.

[…]

According to the notes, KKR officials said the SEC determined that the private-equity firm from 2009 to 2011 had allocated certain expenses to its private-equity funds that “should not have been allocated to the funds.”

As a result, the notes said, KKR gave “fee credits” to the investors in those funds. The sums were blanked out, but the total of such credits was listed as “$X million,” and the credit to the Washington state pension fund was listed as “$X thousand.”

[…]

The SEC staff also found fault with the way KKR handled disclosure of fees it collects from steering portfolio companies into a group-purchasing program run by a company called CoreTrust Purchasing Group, the notes show.

Read the full WSJ story here.

Photo by c_ambler via Flickr CC License

Japanese Government Officials Disagree Over Pension Fund Changes

2014 was a year of change for Japan’s Government Pension Investment Fund (GPIF), and 2015 will bring more of the same.

Aside from appointing a chief investment officer, the pension fund is overhauling its investment strategy and hiring new managers.

But Japan’s welfare minister, Yasuhisa Shiozaki, along with other government officials, might not be on the same page as the GPIF.

From the Wall Street Journal:

Japan’s welfare minister has frequently disagreed with officials in Prime Minister Shinzo Abe ’s government over the nation’s $1.1 trillion Government Pension Investment Fund, according to people familiar with the matter, adding uncertainty to efforts to remake the fund.

[…]

Fights over the process—including the recent hiring of a London-based private-equity executive as chief investment officer—have broken out between Mr. Shiozaki’s camp and other officials at his Ministry of Health, Labor and Welfare, as well as aides to Mr. Abe, according to those involved.

[…]

So far, the disagreements haven’t significantly derailed Mr. Abe’s plans. But in an interview Wednesday, Mr. Shiozaki laid out a cautious investment strategy and declined to praise the chief investment officer, Hiromichi Mizuno.

Mr. Mizuno’s appointment “was decided by the GPIF’s president, so I don’t think it’s the kind of thing I should comment a lot about,” said Mr. Shiozaki.

He went on, “Mr. Mizuno must do his best to fulfill the necessary condition of being able to invest in a safe and efficient manner. That is what we expect. If he can’t do that—if it does not come out in favor of pensioners—then that’s a problem.”

The GPIF manages $1.1 trillion in assets and is the world’s largest pension fund.

Photo by Ville Miettinen via FLickr CC License

CalPERS Put Its Money to Work in India in 2014

The Canada Pension Plan Investment Board, among other pension funds, has been vocal about making India part of their long-term investment strategy.

CalPERS hasn’t announced it from the top of the hills, but the numbers reveal that the country’s largest public pension fund is also taking considerable interest in India.

CalPERS increased its exposure to India by over 33 percent in 2014.

From VC Circle:

The California Public Employees’ Retirement System (CalPERS), one of the top public pension funds in the US, saw its exposure to assets linked to Indian currency rise by over a third to $1.7 billion in the fiscal ended on June 30, 2014 as compared to $1.27 billion in the year ago period, according to the annual financial report of the company.

Almost all of this was due to changes in fair value of assets in the equity securities bucket from $885 million to $1.3 billion. The value of the real assets, representing primarily real estate assets, shrunk marginally.

This data represent investment securities of all CalPERS managed funds, including derivative instruments that are subject to Indian rupee foreign currency risk.

It did not list any quantum against PE assets in India and it could not be ascertained if this is due to its forex hedging over dollar denominated offshore funds or it has actually disassociated itself with India-focused PE funds.

But CalPERS does counts itself as an investor in several global PE funds investing in India including some in their regional funds. These include Blackstone, KKR, Carlyle, TPG, Clearstone, SAIF Partners, etc.

CalPERS manages over $300 billion worth of pension assets.

Photo by sandeepachetan.com travel photography via Flickr CC License

Preqin: Hedge Funds Grew More Than Any Alternative in 2014

Hedge funds experienced the most asset growth of any alternative asset class in 2014, according to a Preqin report.

Despite scrutiny over low returns and high expenses, investors put more money into hedge funds in 2014 than private equity, infrastructure or venture capital.

CalPERS Is Cutting Its Private Equity Managers, But That Doesn’t Mean It’s Breaking Up With PE

CalPERS announced this week that it was cutting down the number of private equity managers it employs – possibly by as much as two-thirds.

The change comes in the name of cutting costs. A similar rationale was used when the pension fund decided to exit its entire hedge fund portfolio last year.

But unlike hedge funds, private equity will remain a significant part of CalPERS’ investment strategy going forward.

From the New York Times:

Calpers is not planning to significantly reduce its allocation to private equity, though it may redistribute it, Joe DeAnda, a Calpers spokesman, said in an email. He said the pension fund may increase its allocation to individual private equity managers as it culls the number of managers.

As of October, Calpers had $31.2 billion invested in private equity, or about 10.5 percent of its overall portfolio, according to the most recent disclosure. It aims to have 10 percent of its portfolio allocated to the strategy.

[…]

When it comes to private equity, Calpers is also trying to reduce costs. But its approach is more subtle.

Réal Desrochers, the pension’s head of private equity since 2011, announced in late 2013 that Calpers aimed to reduce the number of managers to as few as 100. (DealBook reported on it here.)

In a presentation to the Calpers investment committee in December that year, Mr. Desrochers discussed his review of the pension fund’s private equity portfolio. It included 389 managers at the time.

“I think this portfolio should have — given the size where we are — it should be probably around 100, 120, something like that,” Mr. Desrochers said. (See the 29:15-minute mark in this video.)

In other words, this move has been in the making for a long time.

CalPERS allocates about 10 percent of its assets towards private equity.

Photo by rocor via Flickr CC License

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