CalPERS Blows Out Of $6 Billion In PE Investments At A 10% Discount

So, about those pensions you were promised…

The steady hands over at Calpers, who are attempting the world’s worst carry trade with the state’s pension money during a period of -6% real rates, have decided to hit the bid with $6 billion worth of private equity stakes, selling them at a discount this year. 

The California Public Employees’ Retirement System sold the stakes to “free up cash”, according to a new Bloomberg article. The fund is $440 billion and, as we have written about, has gone through 4 different CIO’s since 2009. 

Even then, it had to hire Jefferies to help it “clean up” its portfolio, the report says. 

Lexington Partners and CVC Capital Partners’ Glendower Capital were both buyers from the fund over the last two weeks, the report says. PE executives called the panic selling “probably the biggest-ever involving second-hand fund stakes changing hands,” Bloomberg wrote. 

The pension fund sold the stakes at a 10% discount to their value in fall of 2021, the report says. 

New CIO Nicole Musicco will be tasked with redeploying the capital, ostensibly into whatever investments the next chief is tasked with blowing out at a 10% loss.  

Musicco has said that she wants to build a team that would buy stakes in private companies directly, so the fund can bypass PE firms. 

“The sale positions us to act on our new asset allocation and allows us to capitalize on market opportunities,” she told Bloomberg.