At least two huge pension funds have not invested in funds raised by leading private equity firms that have gone public or plan to do so, fearing the firms' loyalties will be divided between shareholders and their limited partners.
Officials at the $84.8 billion Washington State Investment Board, Olympia, and the $164 billion California State Teachers Retirement System, Sacramento, have demurred on new funds raised by titan Apollo Global Management LLC and hedge fund and private equity firm Fortress Investment Group LLC, both in New York.
“If you look, we didn't re-up (reinvest) with everybody,” said Joseph Dear, executive director of the Washington State board, which has a 25% allocation to private equity.
The board has not invested in any funds offered by Apollo, which is about to turn its privately listed shares into a initial public offering, or Fortress, which went public in February 2007, since March 2006.
Similarly, CalSTRS, which has invested with Apollo in the past, has not invested with the firm since it committed $250 million to Apollo Investment Fund VI in November 2005. Apollo is currently raising Apollo Investment Fund VII, as well as distressed debt, domestic emerging markets and European private equity funds.
Apollo got a big head start on fundraising before it filed its IPO registration in April. The firm collected more than $12 billion in commitments for a $15 billion buyout fund, which it has been raising since September. (The $248.2 billion California Public Employees Retirement System, Sacramento, bought a 10% stake in Apollo last September and committed $1 billion to its seventh buyout fund as well as capital to the two other funds Apollo has in the market.) Steve Anreder, Apollo spokesman, declined to comment for this story because of the IPO registration.
However, not all of the firms have raised new funds since the credit crisis hit last summer For example, Blackstone Group, New York, has not raised a large buyout fund since it went public last June.