CalSTRS' trustees would not be protected from fiduciary claims if the fund were to divest itself of Sudan-related investments, according to a staff memo to the board.
The California Legislature had indemnified trustees and their agents after the state required the $140 billion California State Teachers' Retirement System, Sacramento, to divest itself of holdings in companies that had ties to South Africa in 1986, the memo said. "This legislation violated the prudent person rule," it noted.
Staff plans to continue its policy of monitoring portfolio companies doing business in Sudan, the memo said. CalSTRS, along with a coalition of other public pension funds, first made contact with officials at ABB Ltd., Alcatel SA, Royal Dutch Shell PLC, Siemens AG and Total SA in 2004 to address their activities in the Sudan. Separately, CalSTRS sent letters recently to PetroChina Co. Ltd. and Marathon Oil Corp. officials about their Sudanese ties.
Separately, CalSTRS committed $100 million to VantagePoint Venture Partners V, a multistage venture capital fund. In other private equity deals, the system committed up to $75 million to AG Capital Recovery Partners V, a distressed debt fund run by Angelo Gordon; $70 million to TCV VI, a late-stage venture capital fund focusing on technology companies run by Technology Crossover Ventures; $20 million to Giza Venture Fund IV, an early stage Israeli venture capital fund; and up to $14 million to Pond Ventures III, an early stage European venture fund targeting technology companies.
In co-investments, CalSTRS committed £17.2 million ($30.8 million) to Gala Group Ltd., a co-investment in the Nottingham, England-based gambling company, alongside Permira Europe III. The fund also committed $20 million to QTC Management, a Diamond Bar, Calif.-based evaluator of disability claims, alongside Spectrum Equity Investors IV, and $31 million to CDR CCMG Co-Investor, a co-investment vehicle formed by Clayton, Dubilier & Rice to participate alongside CDR VII in the purchase of Hertz Corp. CDR is part of a private equity consortium that includes Carlyle Partners and Merrill Lynch Global Private Equity.