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CalPERS discloses carried interest in PE

The country’s biggest pension plan detailed how much private equity firms have made in carried interest, including how much The Carlyle Group has profited from two real estate funds.

The California Public Employees’ Retirement System (CalPERS) became the first pension to publicly disclose carried interest earned by private equity firms on Tuesday.

The country’s biggest pension plan has pushed for more transparency, creating a proprietary system called Private Equity Accounting and Reporting Solution (PEARS) to track net gains and payments to external investment partners, among other data points. Overall, CalPERS said that active funds in its private equity portfolio have generated $24.2 billion in realized net gains for the pension plan from 1990 to June 30, 2015, and these external investment partners have realized $3.4 billion from profit sharing agreements with CalPERS.

Tuesday’s disclosure focused on private equity funds. In a media call, CalPERS said most of its real estate funds are classified separately and come up for review next month.

CalPERS released numbers for two private equity real estate funds managed by The Carlyle Group, based in Washington, DC. Carlyle realized $12.8 million in profit sharing from CalPERS’ stake in its 2000-vintage North America opportunistic fund Carlyle Realty Partners III. Other investors in the $564.1 million vehicle included the Pennsylvania Public School Employees’ Retirement System, which committed $141 million, and Netherlands-based MN, which committed €40 million, according to PERE Research & Analytics.

Carlyle also realized $3.3 million in carry attributable to CalPERS’ investment in Carlyle Europe Real Estate Partners, a 2002-vintage opportunistic fund focused on European industrial real estate. CalPERS committed $32.3 million to this €426.6 million vehicle, and other investors include the Teachers’ Retirement System of the State of Illinois, which committed $50 million, and Immowest Immobilien Anlagen, which committed $25 million, according to PERE Research & Analytics.

The disclosure only included CalPERS’ active fund stakes through June 30.

“At the end of the day we believe we’ve been rewarded for the risk we took in this program and for the cost we incurred in accessing this asset class,” said Ted Eliopoulos, the pension system’s chief investment officer, on the media call.

CalPERS said 98 percent of its fund managers complied with requests for information over the summer. In the future, the pension system will not invest with general partners that decline to provide this information.