CalSTRS Details $4.7 Billion Private Equity and Real Estate Commitments

A total of 25 managers received 26 commitments in the last half of the 2017-2018 fiscal year.

The California State Teachers’ Retirement System (CalSTRS) committed more than $4.7 billion to 19 private equity investments and seven real estate investments in the second half of the 2017-2018 fiscal year, system investment reports show.

The biggest share of the commitments went to the system’s $19.3 billion private equity portfolio, which makes up 8.82% of the system’s overall $219.1 billion portfolio.

In private equity, the biggest commitment, $500 million, went to Blackstone Core Equity Partners CA, a $5 billion buyout fund focusing on opportunities in North America and Europe.

The next biggest commitments were $300 million each to three buyout funds: Encap Energy Capital Fund XI, New Enterprise Associates 16, and Apollo Investment Fund IX. The Encap fund is a $6.5 billion buyout fund focusing on upstream energy investments primarily in the US. The New Enterprise Associates fund is a $3.5 billion venture capital (VC) fund primarily focused on technology and healthcare investments in the US. The Apollo Investment Fund is a $23.5 billion mega buyout focusing on value-oriented investing primarily in North America.

 CalSTRS has also committed $250 million each to three additional private equity funds: Clayton, Dubilier & Rice Fund X, a $7.5 billion buyout fund focused on control investments in the US and Europe; CalSTRS New and Next Gen Manager Fund IV, a buyout and VC fund-of-funds targeting emerging managers; and GI Partners V, a middle-market and buyout fund focused on control and down-side protected growth investments.

In the overseas buyout category, CalSTRS also committed €250 ($285) billion to CVC Capital Partner VII fund, and €153 ($174) billion to Vitruvian VIP III fund. The CVC buyout fund focuses on control investments in upper-middle and large market companies primarily in Europe and secondarily in the US. The Vitruvian fund focuses on emerging themes of change or disruption to market incumbents in Northern and Western Europe.

Turning its attention to Asia and Australia, CalSTRS committed $180 million to the KKR Asian Fund, a buyout fund focused on goal-oriented investments in those two continents.

A smaller commitment of $150 million went to a buyout fund managed by StonePoint Capital, the Trident VII fund. Smaller commitments were made to the Peak Rock Capital Fund II & Peak Rock Credit Fund II. The private equity fund targets distressed debt in North America and Europe.

 The CalSTRS commitments also include money allocated to three smaller VC funds. VC firm BRV’s fund VI, which focuses on early-stage VC with an emphasis on technology investments in the US, receive $30 million in commitments. Another $40 million was committed to Lilly Asia Ventures LAV Biosciences Fund IV. The VC fund focuses on healthcare investments primarily in China. Lastly, $25 million was committed to SVB Capital Partners IV, an early-stage VC fund focused on breakout technology investments in the US.

In its semi-annual private equity investment report, CalSTRS also disclosed the names of three private equity co-investments. They are $65 million committed to Blackstone TN Partners, a healthcare co-investment, $65 million to MBK Partners 2017-1, which focuses on the services sector in Asia, and $125 million to ASF Cruise Co-Invest, which invests in the secondaries arena. 

All the commitments were made in the six-month period ending June 30, 2018.

In its semiannual real estate report, CalSTRS disclosed it made $1.3 billion in commitments during the January to June 2018 period. The CalSTRS real estate portfolio totals $30.2 billion for 13.8% of the overall portfolio.

The biggest discretionary commitment of $500 million was made to Blackstone REP Account C, a co-investment with the Blackstone Group focusing on opportunistic and core-plus real estate assets.

CalSTRS also committed $157 million and $153.9 million to two separate accounts managed by real estate firm CBRE.

The pension system has invested in a $147 million joint venture with Pacific Coast Capital Partners to pursue opportunities in value-add real estate as well as in a $125 million joint venture with Beacon Capital Partners to invest in core and value-added real estate investments in the office sector.

CalSTRS also listed one other real estate co-investment in its semiannual report, $100 million in core real estate with TCI Real Estate Partners.

One nondiscretionary real estate commitment was also listed in the report, $125 million to PCCP Credit IX, managed by Pacific Coast Capital Partners. The fund focuses on value-added real estate investments.

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