Searches and Hires

CalSTRS puts $5 billion to work in first half of 2018

CalSTRS committed a total of $5 billion across private equity, real assets and co-investments in the first half of 2018, according to a report by the $228 billion pension fund's private equity consultant, Meketa Investment Group.

The West Sacramento-based pension plan committed $875 million to three Carlyle Group funds: $450 million to North American buyout fund Carlyle Partners VII, $250 million to Asia buyout fund Carlyle Asia Fund V and $175 million to European buyout fund Carlyle Europe Partners V. CalSTRS reported a $50 million commitment to Carlyle Asia Partners V in the second half of 2017.

CalSTRS officials also committed $300 million to Thoma Bravo Fund XIII, a North American buyout fund, and $100 million to Thoma Bravo Discover Fund II.

The California State Teachers' Retirement System committed $250 million to GSO Capital Solutions Co-Investment Fund III, a North American credit co-investment fund managed by GSO Capital Partners, Blackstone Group's credit group.

Private equity fund ICV Partners IV received a $250 million commitment, while global buyout fund TPG Partners Fund VIII received a $200 million commitment from the pension fund.

Pension fund officials also committed $234 million to CVC Strategic Opportunities II, a global long-lived buyout fund managed by CVC Capital Partners; $158 million to European buyout fund Equistone Partners Europe Fund VI; $150 million to The Resolute Fund IV, a North American upper-middle-market buyout fund managed by The Jordan Co.; $100 million to European buyout fund Permira Growth Opportunities I; and $91 million to North American buyout fund Encap Flatrock Midstream Fund IV; and $75 million to U.S. venture capital fund SVB Strategic Investors Fund IX, managed by SVB Asset Management.

CalSTRS also committed a total of $353 million in unnamed predominantly U.S. buyout co-investments and $116 million in two diversified secondary co-investments.

Separately, in real assets, CalSTRS committed $400 million to an existing separately managed account with Capital Dynamics to invest in renewable energy generation projects. The total size of the portfolio could not be learned.

Pension fund officials also committed $300 million to Argo Investor Alliance II, extending a managed account for an alliance that also includes Dutch money manager APG Asset Management and the alliance's investment manager, Argo Infrastructure Partners. CalSTRS initially committed $250 million to the alliance in 2015.

CalSTRS also committed $250 million to Blackrock (BLK) Global Energy & Power Infrastructure Fund III, managed by BlackRock's real assets group. Pension officials also committed $300 million to a separate account with an unidentified commodities manager, $300 million for a diversified infrastructure managed account with an unidentified manager and $200 million for an agriculture separate account.

CalSTRS declined to provide further information on these investments because they are "strategic in nature," Michelle Mussuto, CalSTRS spokeswoman, said in an email.

CalSTRS expects to commit a total of $7 billion to private equity in the full year 2018. Recently, the pace of private equity commitments has outpaced capital being called by the pension fund's private equity managers, according to a report to the investment committee for its meeting on Thursday. CalSTRS' private equity portfolio totaled $18.7 billion as of March 31, with total exposure of $34.2 billion including $15.5 billion in unfunded commitments.

During the investment committee meeting, Chief Investment Officer Christopher Ailman said pension plan officials are asking general partners to "be patient" investing capital "since prices are so high." Indeed, he added that some of CalSTRS' private equity general partners have asked CalSTRS officials to extend the investment periods of their funds.

"They do not want to chase these high prices ... which is a good thing," Mr. Ailman said.