CalPERS Funnels Money to TPG and Grosvenor to Find New Private Equity Managers

Posted on 01/10/2023

The California Public Employees’ Retirement System (CalPERS) announced a US$ 1 billion commitment to TPG Capital and GCM Grosvenor Elevate. Each alternative investment firm will receive a US$ 500 million allocation. CalPERS has been investing in newly established teams and partnerships in the investment industry for more than 30 years, seeding private equity firms to real estate companies. TPG, through its TPG NEXT fund, the firm’s strategy dedicated to investing in diverse alternative asset managers, and GCM Grosvenor Elevate will seek to identify and cultivate the next generation of investors. Identified investment managers will gain access to the capital, resources, and expertise they need to mitigate business risks and prudently scale their firms in a competitive marketplace. This partnership also aligns with CalPERS’ expansion into the private markets.

“CalPERS is committed to giving access and opportunity to new and innovative talent in the investment industry,” said CalPERS Chief Investment Officer Nicole Musicco said in a press release. “We want to create and nurture an ecosystem that will serve as a catalyst to seed the next generation of diverse talent and foster different ways of seeing and solving problems.”

“We welcome and encourage other global allocators to join us in this effort and reimagine the traditional and structural dynamics in the markets.”

The CalPERS Board recently increased its allocation to private investments. Private equity is the highest performing asset class in the CalPERS portfolio and its allocation was increased from 8% to 13% starting with the 2022-2023 fiscal year. Musicco was brought on from the Ontario Teachers’ Pension Plan. The pension plans to make more shifts into private markets, away from public market instruments. In November 2022, CalPERS amended two of its private markets investment programs, with management of the recently created Growth & Innovation program consolidated with that of the private equity asset class.

Keywords: California Public Employees Retirement System, Ontario Teachers Pension Plan.

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