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ALTERNATIVES

Private equity chief Réal Desrochers leaving CalPERS

Real Desrochers CalPERS
Real Desrochers

Réal Desrochers, managing investment director of private equity at CalPERS, is leaving the pension fund, effective Friday.

Mr. Desrochers is leaving to join “a large overseas bank,” the $311.8 billion California Public Employees' Retirement System, Sacramento, said in a news release Wednesday. The name of the bank and what position Mr. Desrochers will hold, could not be learned immediately.

Sarah Corr, investment director, will act as interim head of the pension fund's $26 billion private equity portfolio, the release said.

Mr. Desrochers joined CalPERS in 2011 after working as chief investment officer of the Saudi Arabian Investment Co. Prior to that, he had been in charge of the private equity portfolio at the $202.1 billion California State Teachers' Retirement System. He left CalSTRS in 2009.

"Réal has worked for years to reduce costs and increase transparency throughout the industry, and he leaves a legacy at CalPERS of working tirelessly on behalf of our members," said Ted Eliopoulos, CalPERS' chief investment officer, in the release.

"Because of him, we've been able to streamline the number of managers we work with, while at the same time negotiating much more favorable terms with our business partners. Réal has also been instrumental in moving the private equity industry to become much more open by adopting a standardized approach to reporting fees."

Mr. Desrochers could not be reached for comment.

CalPERS spokesman Wayne Davis said in an email there are “no immediate plans to begin a search for a permanent replacement.” He added that Messrs. Desrochers and Eliopoulos would not be available for interviews.

In November, a review of CalPERS' private equity program by its then private equity consultant, Pension Consulting Alliance, recommend a succession plan be developed for Mr. Desrochers.

CalPERS' private equity portfolio has been continuing to reduce the number of manager relationships and cut the portfolio's cost.

The system's goal is to get down to 30 private equity managers by 2020 from 99 as of June 30. As part of that manager reduction strategy, CalPERS sold interests in 26 private equity funds in the last six months of 2016 for $426 million.

In December, Mr. Eliopoulos ordered a review to see what the pension fund can do to maintain the portfolio's private returns, including cutting fees and making directed investments.

Mr. Desrochers had headed CalSTRS' private equity program for 11 years before he left in 2009, said CalSTRS CIO Christopher Ailman in an interview.

He credited Mr. Desrochers with helping build the private equity program from around $3 billion to more than $17 billion at the time of his departure.

“This is a major loss for the state,” said Mr. Ailman.

Arleen Jacobius and Randy Diamond contributed to this story.