COLUMBUS, Ohio Ohio Public Employees Retirement System doubled its allocations to its two hedge fund-of-funds managers, Crestline Investors and Pacific Alternative Asset Management, which now will run $50 million each.
The board of the $77.6 billion fund also heard presentations on the effects of a state House bill that would require public funds in the state to divest from holdings in public and private foreign corporations doing business in Iran. Michele Kowalik, a spokeswoman for OPERS, said the bill would cost the fund $244 million a year in lower investment returns.
A memo prepared by Tom Sherman, government relations officer for OPERS, explained the fund opposes the bill because of its effect on investments. While no one at OPERS questions that the bill is well intentioned, state law clearly provides that the OPERS board and staff are under a fiduciary responsibility to act in the exclusive best interest of our members and our duty of loyalty is to our members. Mr. Sherman prepared his remarks for the House Financial Institutions, Real Estate and Securities Committee, but his testimony was deferred.
New Orleans trims fund-of-funds field
NEW ORLEANS City of New Orleans Employees Retirement System interviewed five firms in its search for up to three managers to run up to a total of $15 million in hedge funds of funds, confirmed Jerry Davis, chairman of the $410 million funds board of trustees. They are: Societe Generale Asset Management, Deutsche Asset Management, Grosvenor Capital Management, Hatteras Investment Partners and Sciens Capital Management. More firms will be interviewed at the next board meeting on June 19, when the board expects to make a selection. Funding will come from terminating managers whose relative performance may not be as good as their peers, he said. Officials will start by reviewing the funds alternative managers, Mr. Davis said.
Morgan Stanley is assisting in the invitation-only search.
Frank: Congress may act on acquisitions
WASHINGTON Private equity acquisitions may be contributing to a widening of the nations income gap by enriching the few without benefiting American workers and that perception could spur a legislative response, Rep. Barney Frank, D-Mass., said May 16 at a House Financial Services Committee hearing.
We do have a concern about the impact on workers, said Mr. Frank, chairman of the committee. To the extent we see gross imbalances, were going to have to act.
But Douglas Lowenstein, president of the Washington-based Private Equity Council, a newly formed organization representing key private equity firms, testified that a crackdown on private equity acquisitions would not eliminate income inequality. He also said that tens of millions of Americans are benefiting from pension plan and endowment investments in private equity.
These investors seek out private equity because the return on investments made in private equity funds far outstrips that delivered by many other investment opportunities, including the public markets, Mr. Lowenstein said.
Bill on hedge fund registration expected
WASHINGTON Sen. Charles Grassley, R-Iowa, on May 15 introduced legislation that would require hedge funds to register with the SEC, according to a news release from Mr. Grassleys office. The U.S. Court of Appeals for the District of Columbia threw out an SEC rule last year that required hedge fund registration, contending the agency lacked the statutory authority.
In the release, Mr. Grassley said his bill would give the SEC the authority to do what it was already trying to do. The goal of my initiative is to make our financial markets more transparent.
In a joint request March 1, Mr. Grassley and Sen. Max Baucus, D-Mont., asked the General Accountability Office to investigate the impact that public and private pension plans hedge fund investments could have on plan participants. No results have been publicly released.
Ontario Teachers in JV for English airport
TORONTO Ontario Teachers Pension Plan formed a joint venture with Victoria Funds Management, Melbourne, Australia, to acquire a 48.3% interest in Birmingham (England) International Airport for C$918 million (US$835.9 million), confirmed Debra Hanna, Ontario Teachers spokeswoman. OTPP owns 60.1% of the venture, Airport Group Investments Ltd., and Victoria Funds owns 39.9%. Ontario Teachers has C$106.1 billion in assets; VFM, which manages investments for Victoria state government entities, has more than A$40 billion (US$32.9 billion) in assets.
Citigroup creates infrastructure business
NEW YORK Citigroup has launched Citi Infrastructure Investors, which will be part of its Citi Alternative Investments business, said Jon Diat, spokesman. The new group will manage equity investments in infrastructure and oversee a management company focused on the operation of these investments.
Managing Directors Juan Bejar and Felicity Gates will be co-heads of the new group. Mr. Bejar was general manager of infrastructure and executive vice president at Cinpra, a subsidiary of Grupo Ferrovial; he is being replaced by Inigo Meiras, CEO of Ferrovials airport division, and Enrique Diaz Rato, CEO of Cinpra. Ms. Gates was a managing director and head of RREEFs North America infrastructure business; she will not be replaced, said Mayura Hooper, RREEF spokeswoman.
Also on the Citi Infrastructure team are Managing Directors Colin Campbell, who had the same title at Citi Markets and Banking, and J.G. Duthie-Jackson, who had the same title at Citis European infrastructure and corporate securitization group.
Stanfield to spin off hedge fund operations
NEW YORK Stanfield Capital Partners will spin off its hedge fund operations into Solus Alternative Asset Management. Terms of the deal, expected to close by June 30, were not disclosed, said Jamie Tully, a Stanfield spokesman. Christopher Pucillo, partner and head of Stanfields hedge fund strategies, will be Solus CEO. Mr. Tully said Solus will continue to manage Stanfields hedge funds; he would not disclose the size of those investments. Stanfield managed a total of $11.2 billion as of Dec. 31, according to the firms latest SEC filing. Mr. Tully said the hedge fund operations were being separated from Stanfield so the firm can focus on its collateralized loan obligation investment strategies.
Context Capital, TQA to merge
SAN DIEGO Hedge fund managers Context Capital Management and TQA Investors will merge by the end of the summer into a single firm, Context/TQA Advisors. Combined assets will total $1.2 billion, said Robert Butman, TQAs president and CEO. Managing principals of the new firm will be Mr. Butman, who also will serve as president; Michael Rosen, co-chairman and CEO; and Robert Fertig, co-chairman and CIO. Messrs Rosen and Fertig are Context Capital co-chairmen and CEO and CIO, respectively. Mr. Butman said the firms investment teams are complementary, and layoffs are not expected. The new firm will have offices in San Diego and Stamford, Conn.
Mr. Butman said both firms are institutionally oriented, but its harder to get access to institutional investors if youre a sub-billion hedge fund. This is a huge home run for investors as it significantly deepens our bench when it comes to research.
PGGM, Behringer Harvard to co-invest in U.S. apartments
ADDISON, Texas Behringer Harvard and the e81 billion ($109.6 billion) Stichting Pensioenfonds PGGM, Zeist, Netherlands, will co-invest up to $225 million in apartment communities in top U.S. metropolitan areas, according to Behringer spokeswoman Katie Myers. PGGM will invest in individual assets with a commercial real estate company or one of its current investment programs, and Behringer Harvard will provide acquisition, asset management and disposition services. Consultant Atlantic Partners is assisting.
Behringer will commit $125 million and PGGM will commit $100 million, Ms. Myers said. Behringer has begun looking for appropriate properties, she said.
PGGM spokeswoman Ellen Habermehl was not available to comment at press time.
Shorenstein closes Nine fund at $1.3 billion
SAN FRANCISCO Shorenstein Properties closed the $1.3 billion Shorenstein Realty Investors Nine fund, said Andrew Neilly, spokesman. The firm invested $100 million in the fund, which will invest in value-added office and mixed-use properties in major U.S. markets. The remaining investors include the $18 billion Yale University endowment fund, New Haven, Conn.