CalPERS to Outsource Private Equity Assets to BlackRock

Discussions in preliminary stage, source says.

The California Public Employees’ Retirement System (CalPERS) is seeking to outsource its private equity business to BlackRock, according to anonymous sources quoted by Reuters and Bloomberg.

The reported discussions between the largest US pension fund and the world’s largest asset manager to oversee some or all of CalPERS’s private equity investments are at an early stage, which may not result in an agreement, according to Reuters. For the past two decades, private equity has been the $327 billion CalPERS’s best-performing asset class and accounts for roughly $26 billion of the fund’s portfolio.

“No decisions have been made. We are still looking at models to bring back to the board,” a spokeswoman for CalPERS told CIO in an email.

In the event of a deal, BlackRock would win big, as the move would assist it in expanding its alternatives business, a footprint the $5.7 trillion money manager has been trying to grow to increase fee revenue and meet client demand for investments with little stock and bond market ties, according to Bloomberg, who first reported BlackRock’s talks with CalPERS Thursday.

BlackRock could not be reached for comment.

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