CalPERS Makes $34B Bet on Private Markets

The California Public Employees’ Retirement System (CalPERS) announced plans to increase its private market commitments to 40% from 33%, or approximately $34 billion.

Private equity will increase to 17% from a target of 13% while private debt will increase to 8% from 5%. The real asset program remained unchanged.

The $483 billion pension behemoth invested $14 billion in private equity, private debt, and real assets during the third quarter. Most of the activity was concentrated in the $68 billion private equity program, which saw the inclusion of 34 mandates totaling $6.8 billion from July to September 2023, including both re-ups and new commitments.

The private equity program grew by 8.8% in 2023, with most contributions going to CVC Capital Partners funds. CVC Capital Partners IX received a $512 million commitment for its European and Americas PE fund, which completed in July 2023 with $29 billion. CalPERS provided a $300 million commitment to CVC Capital Partners Asia VI.

The $12 billion private debt program produced the highest returns among alternative investment strategies, gaining more than 13% in 2023. CalPERS remained active in the loan area too, with capital commitments totaling $2 billion. Most of the cash went to Ares Management, which received a $1.3 billion commitment for its Ares Senior Direct Lending Fund 3. Another $650 million was invested in the Ares European Credit Investment VII-ACE VI Coinvestment.

Last year was a difficult one for the $68 billion real asset program, with losses totaling 9.6%. CalPERS did, however, invest $5.1 billion in numerous real estate assets during the third quarter. The largest commitment was made to Global Infrastructure Partners V, which received $850 million for the main fund and another $850 million for its sidecar. The fund is claimed to aim for $15 billion in assets and is well-known for its energy investments.