CalSTRS staff opposes a California bill that would ban statewide pension funds from future investments with private equity firms owned at least in part by sovereign wealth funds whose countries violate human rights, according to a memo for today’s board meeting. Staff at the $166.5 billion California State Teachers’ Retirement System, Sacramento, said the system could lose up to $5.3 billion in revenues if the bill passes. The CalSTRS board is voting this afternoon on whether to oppose the bill.
Staff estimated that the system could lose at least $1.5 billion in revenues if it is prohibited from investing with two of its private equity managers that fall under the ban, Carlyle Group and Apollo Management, but the losses could rise in the future. “There are likely to be three to as many as seven or more firms that may fall under this legislation in the near future. This should result in a total loss of up to $5.3 billion over five years,” according to a staff memo to the board.
The Mubadala Development Authority owns 7.5% of Carlyle while the Abu Dhabi Investment Authority owns 9.9% of Apollo. CalSTRS invests $1.1 billion and $250 million in Carlyle and Apollo, respectively. Clark McKinley, spokesman at the $240.6 billion California Public Employees’ Retirement System, Sacramento, said staff is analyzing the bill and the board will discuss its position at its March 17-19 meeting. He declined to comment further.
