CalPERS allocated a total of $5.4 billion in 11 real asset commitments, documents released by the $378.4 billion Sacramento-based pension fund show.
California Public Employees' Retirement System committed an additional $1 billion to Golden Reef Infrastructure Trust, a separate account managed by infrastructure manager QIC. Last year, CalPERS committed $607 million to Golden Reef Infrastructure Trust.
It also committed $975 million to GID Investment Advisers for two multifamily portfolios — $700 million to IMP-Base and $275 million to IMP-DT 2012 and Beyond; $875 million to FSP-Base, a core office portfolio managed by CommonWealth Partners; $704 million to CalEast Solstice, a joint venture between CalPERS and GI Partners; and $600 million to Gulf Pacific Power Tranche A, a joint venture between CalPERS and Harbert Management Corp. formed to invest in North American power assets.
CalPERS also committed $447 million to TechCore, a core real estate investment vehicle managed by GI Partners for CalPERS and for the $241.3 billion California State Teachers' Retirement System, West Sacramento. The fund committed $430 million to Pacific Multifamily Investors-base and $120 million to Pacific Multifamily Investors-DT, partnerships between CalPERS and Pacific Urban Residential investing in multifamily properties.
Further, pension officials committed $157 million to IMI-Base, managed by Institutional Mall Investors, a joint venture between CalPERS and real estate manager Miller Capital Advisory.
CalPERS also committed an additional $104 million to Global Retail Investors-Base, a joint venture between CalPERS and First Washington.
Pension officials also made an additional €30 million ($33 million) to Permira VII, a fund that buys large companies, managed by Permira Advisers. CalPERS originally committed €520 million earlier this year.
Separately, CalPERS revealed three of the bidders — Neuberger Berman, HarbourVest Partners and BlackRock — in its search for a private equity manager to run a portion of its portfolio under its new private equity strategic plan used employee placement agents.
CalPERS is in the midst of launching the new private equity investment plan that includes establishing two outside entities to manage private equity investment strategies. One portfolio to be managed by the outside entity, Pillar III, would make late-stage venture capital and growth equity investments in technology, life sciences and health-care companies. The other outside entity, Pillar IV, would make long-term investments in core economy companies. The two direct portfolios are expected to grow to $10 billion each over a 10-year period.
"This opportunity was part of an active solicitation. CalPERS closed the solicitation without awarding any contract," the documents said.
Last year, CalPERS launched a search for a manager to run Pillar II, a commingled fund strategy, which also includes co-investments, separate accounts and secondaries. Bidders in the alternative solicitation proposal, an invitation-only process, also included AlpInvest Partners, Hamilton Lane, Neuberger Berman and Goldman Sachs Asset Management. In an email, CalPERS spokeswoman Megan White said the search was "part of our effort to gather information as part of our ongoing (private equity) efforts."
"We remain committed to Pillars III and IV and we'll provide more information when we have something to share," Ms. White said.
Separately, CalPERS investment committee is expected decide whether to adopt a new total fund investment policy that includes allowing aggregate leverage when the staff directly controls the exposure of up to 20%. Direct control by the staff is defined in the proposed investment policy as when the staff applies debt to in-house portfolios or when the staff has authority over a money manager or a limited partnership that uses debt. The leverage calculation will include leverage that is staff-controlled as defined by the investment policy and recourse debt, which are loans backed by the borrower's collateral. Leverage used in alternative investment strategies and limited partnerships for which a third party has been given "irrevocable authority" to invest on CalPERS' behalf will not be included.
What's more, should the aggregate leverage limit be exceeded "due to a market dislocation," the staff will evaluate the leverage exposures and develop a plan to lower the aggregate leverage back toward the guideline within 90 days.
CalPERS currently can use some leverage. Its treasury management policy references "borrowed liquidity," which is the short-term use of leverage to help maintain the pension fund's target risk profile. Borrowed liquidity requires CalPERS to have a plan to unwind the debt if the duration extends past 90 days. CalPERS' investment policy also allows the use of leverage within global fixed income, global equity and real assets.
The new policy also would shift the oversight of CalPERS' investment benchmarks. The proposed investment policy states that the relevant consultants would review any changes to the construction rules of any policy benchmark, with any modifications that the consultant considers material to be sent to the investment committee for approval. Current policy states that when a benchmark is modified either the staff or a committee member can bring the changes before the committee.
CalPERS also reported in agenda materials that it made progress in persuading public companies in its equity portfolio to diversify its boards. Some 53% of the 682 companies contacted by CalPERS since July 2017 have added diverse directors to their boards, said Simiso Nzima, CalPERS investment director for corporate governance in an interview.
CalPERS also voted against 255 directors at 97 companies where diversity discussions did not result in constructive outcomes in 2019, he said. In 2018, CalPERS voted against 468 directors at 145 companies due to lack of progress on diversity.
The results show that CalPERS efforts regarding diversity are working, Mr. Nzima said.
