Gregory Roth

California’s two giant pensions blazed ahead of their benchmarks to post fiscal-year returns that each topped 20 percent. The $154.3 billion California State Teachers’ Retirement System, said its 23.1 percent return was “remarkable,” adding that it was its best performance in 25 years. Meanwhile, the $237.5 billion California Public Employees Retirement System posted a 20.7 percent return, the best since 1997. Together, the two pensions are now $66 billion richer than they were at this time a year ago. Leading the strong returns were public and private equities. For CalPERS, private equity, which accounts for 13.8 percent of its portfolio, returned 25.3 percent for the year, whereas public equities, accounting for 53.4 of the portfolio, returned 30.2 percent. At CalSTRS, private equity, which makes up 14.3 percent of its portfolio, returned 22.5 percent for the year, while public equities, which accounted for 53.4 percent of the portfolio, returned 31.9 percent for the year.

In an effort to build a bigger private equity portfolio, the $6.5 billion Municipal Employees Retirement System of Michigan has engaged a newly merged Carlyle and AlpInvest to manage as much as $750 million of the pension’s money. The pension currently has a 9.6 percent allocation to private equity, or slightly more than $630 million in invested capital. The new MERS initiative calls for $500 million to be invested by AlpInvest, the Netherlands-based fund-of-funds unit of Carlyle, plus $250 million to be invested by Carlyle’s managed funds group. The investment contract is for five years. The Washington D.C.-based Carlyle Group, which now manages about $150 billion in assets, agreed in January to merge with AlpInvest. That merger, which was originally slated to close in March, had been delayed until July 1. The MERS deal is the first asset management deal to be announced by the newly merged private equity firm.

The buttons have been hot in California during the frustratingly slow economic recovery, especially on the issue of public pensioners getting more than $100,000 per year in retirement. Even though six-digit pensions go to about two percent of California public sector retirees, the message, it seems, is that those working for the state should not get large pensions, or salaries, no matter what talents or responsibilities they bring to their jobs. So, what about the guy who manages the $232 billion pension fund? Joe Dear, who oversees investments for the California Public Employees’ Retirement System was paid $548,142 in 2010, according to new salary disclosures released Tuesday by California’s comptroller, John Chiang. That made him the sixth highest-paid person on the California payroll. Dear's 2010 salary would greatly exceed that of Gov. Jerry Brown, who will earn $173,986 in 2011, according to the California Citizens Compensation Commission. That, by the way, makes Brown the seventh-highest paid governor in the country. (Former Gov. Arnold Schwarzenegger didn't accept a salary in 2010.)

For all the private equity firms waiting – patiently and impatiently – for limited partners’ moods to improve, the wait is over. According to a new LP survey by Preqin, the private equity data firm, LPs are moving squarely off neutral and into high-gear in terms of committing new funds. More than three times as many LPs, about 46 percent of Preqin’s respondents, said they planned to increase the amount of capital that they commit to private equity during 2011, as compared to 13 percent who said they planned to reduce their commitment levels. And of those LPs who planned to commit more in 2011, about two in every five said they said they planned to increase their commitments “significantly.” The Preqin results echo another recent study – this one by Coller Capital – which reported that more than twice as many LPs planned to increase their target allocations to private equity in 2011, as compared to those who planned to decrease their allocations. The Preqin results were more profound, revealing that more than three times as many LPs planned to increase their target allocations to PE over the next 12 months as those that planned to decrease them.

With the unexpected exit of Ken Frier, Stanford Management Company’s chief investment officer, after less than a year in the job, the university has not yet revealed how the departure would affect the management of the school’s $13.8 billion endowment, the nation’s fourth largest, and its private equity program. About 12 percent of Stanford's endowment is allocated to private equity and venture capital, a portion that would amount to about $1.7 billion. According to Dow Jones, the venture-heavy endowment has investments with Greylock Partners, Highland Capital Partners and Oak Investment Partners. Its private equity holdings include investments with Oak Hill Capital Partners and China's Hony Capital. A Stanford spokeswoman, Lisa Lapin, said the endowment was “back to the status quo,” and that the chief executive of Stanford Management Company, John Powers, would remain in “day-to-day operational control.” She said she was unable to say whether Stanford planned to replace Frier or whether it planned to install an interim investment chief.

Searchlight Capital Partners, a media-focused private equity firm working to launch its debut fund, has come closer to reaching its initial goal of raising $1 billion, according to people familiar with the fund. In addition, federal filings reveal that the firm has so far raised several hundred million dollars, although those figures could include some overlap. The $1 billion goal is considered large for a first-time fund, although the firm’s three founders are by no means new to the private equity space. The three founders of Searchlight have overseen deals in media and other industries at two top private equity firms as well as one of Canada’s leading pension funds. Before co-founding Searchlight, Eric Zinterhofer helped lead media and telecommunications investing at Apollo Global Management, where he was a partner. He remains the chairman of Charter Communications, the St. Louis, Missouri-based cable television giant.

The largest pension in America just named a new chief for the nation’s largest private equity program. Réal Desrochers was named senior investment officer in charge of private equity at the California Public Employees Retirement System. CalPERS's private equity portfolio has about $33 billion in assets and $49 billion in committed capital. Overall, CalPERS has $236 billion under management and provides benefits to some 1.6 million people. Desrochers will report to Joe Dear, CalPERS’ chief investment officer. Desrochers is a familiar name in private equity, most notably as director for alternative investments at the $155 billion California State Teachers Retirement System, the state’s other giant pension. During his 11 years at CalSTRS, Desrochers more than quintupled the size of its private equity program to $17 billion, and garnered average annual returns of 17.5 percent. He left CalSTRS in 2009.

The giant California Public Employees' Retirement System tentatively plans to name a new head of private equity on Tuesday, May 31st, more than a year after it put its last private equity chief on administrative leave, according to a spokesman who said CalPERS would have no further comment until then. Leon Shahinian, the former PE chief at CalPERS, was put on administrative leave after being identified in a pay-to-play lawsuit brought by former state attorney general (and now governor) Jerry Brown. Shahinian formally resigned from the $231 billion pension in Aug. 2010. The pension's $32 billion alternatives portfolio has been managed by chief investment officer Joe Dear during the nine-month search following Shahinian's departure.

Once upon a time, there was an easy way to tell the man on the street the difference between Blackstone and BlackRock. Blackstone was a private equity colossus, while BlackRock was a giant institutional and retail money manager. Now, all of a sudden, this distinction has become fuzzier. BlackRock, which oversees more than $3.6 trillion in assets worldwide, is set to start its own private equity group, hiring three founders of Merrill Lynch’s private equity arm to help it become a player in the last alternative area where BlackRock lacked a direct presence. The new private equity group will be part of BlackRock’s alternative investment division, which manages some $115 billion in assets, already one of the country's largest alternative asset managers. Although the firm offers private equity through funds of funds, today’s announcement trumpets the firm’s intention to create its own branded private equity funds.

On the wings of LinkedIn's IPO, a panel of three top venture capitalists discussed the fast-improving IPO environment, grooming top tech entrepreneurs, and finding companies that could be the next Google. After a long dry spell, IPOs are recovering along with an improving economy, according to Saad Khan of CMEA Capital, Axel Bichara of Atlas Venture, and Bill Maris of Google Ventures, all of whom tell Jen Rogers of Reuters Insider that now is a good time to be a venture capitalist. Still, the quest for top talent is extremely competitive, with the best entrepreneurs having multiple options. The panelists say finding the great founders of companies is what makes venture capital a difficult business.