CalPERS and The Yucaipa Cos. are forming a merchant bank holding company to tap Taft-Hartley and public pension funds to invest in private equity and buyout investments. The $147 billion California Public Employees’ Retirement System, Sacramento, is committing up to $560 million to the holding company, Yucaipa American Funds, which will focus on industries and companies with strong corporate governance practices and good labor relations.
CalPERS’ investment includes $35 million for a 12.7% stake in the holding company; a $250 million commitment to future alternative investment funds and businesses offered by YAF; and an option to invest up to $275 million in the holding company, which would boost CalPERS’ interest to 20%. Taft-Hartley plans control more than $400 billion in assets, but they invest only 0.1% in private equity, a CalPERS press release noted.
