US pension fund CalSTRS approves $4.8b PE investments in H1

Photo: REUTERS/Beawiharta

US pension fund California State Teachers’ Retirement System (CalSTRS) committed a total of $4.8 billion to private equity managers in the first half of this year, including $3.2 billion during the second quarter.

According to its latest private equity investment report, the commitments were made to 25 funds, eight co-investments, and three co-investment funds. About 70 per cent of the total commitments went to buyouts or buyout-related co-investments.

During the period, the pension fund completed a $100 million investment in CVC Asia V, the fifth Asia Pacific fund of CVC Capital Partners. The fund closed in April at its hard cap of $4.5 billion.

Approximately 14 per cent of commitments made by the pension fund have been fully realized as of March 31, 2020.

The value of CalSTRS’s PE portfolio stood at $23.1 billion as of March 31, representing an exposure of 10.2 per cent, above the current target allocation of 9 per cent but lower than the long-term target allocation of 13 per cent.

“Private equity remains, and is expected to remain, an important return driver for CalSTRS,” the pension fund said. The PE program had contributed $1.8 billion combined over the last two quarters.

CalSTRS PE Overview

The pension fund, however, noted that the program’s overall value decreased by $1.6 billion after adjusting for cash flows during the six months since the Q3 of 2019.

“We note that public equities reached market lows around the end of Q1 2020, and recovered strongly during Q2 2020. However, this recovery has not yet been reflected in the Private Equity Program’s value due to the lag in private equity valuation reporting,” CalSTRS said.

Established in 1913, CalSTRS provides retirement, disability, and survivor benefits to California’s public school educators from pre-kindergarten through community college. It began investing in the PE asset class in 1998.

The semi-annual performance report also showed that that the pension fund continues to commit across several vehicles offered by its largest managers – Blackstone Group, which accounts for the pension fund’s 12.6 per cent exposure, Carlyle Group (4.1 per cent), Permira (3.9 per cent), TPG Capital (3.3 per cent), and Summit Partners (3.2 per cent).

The pension fund noted that global fundraising activity for PE funds in Q1 was lower than the prior three quarters, at $133 billion raised.

However, it stressed that appetite for the asset class remained strong despite the COVID-19 pandemic and potential headwinds for the global economy as total capital committed exceeded levels in the first quarter of 2019 despite fewer funds closing.

“Overall, fundraising is showing signs of slowing as more funds are taking longer to close despite the number of funds in market and the amount of capital targeted remaining in line with the highs of January 2019,” it said.

Across all asset classes, the pension fund has significant exposure to the US, with approximately 75.3 per cent of its portfolio invested in the country. Japan is the fund’s next-largest exposure at 3.4 per cent. China and Hong Kong account for 1.4 per cent and 0.9 per cent, respectively, of CalSTRS’s exposure.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.