“What happens if one of the managers decides to lay off 10% of staff of one of their investments? Can you imagine the headlines and pressure on us to step in and prevent that from happening,” said one board member.
Consultant Wilshire projects an expected 10-year return of 9.9% for private equity.
CalPERS ranks Wilshire as the top candidate for both its general fund and private equity program as the nation’s largest pension system continues its PE overhaul.
The system looks to reach an 8% targeted allocation to private equity.
Some investors have started to push back on GPs, but it appears they are hesitant to slam on the brakes for fear of missing out on strong returns down the road.
More LPs are pushing back against usually routine requests as they face slowing cash flows and concerns about valuations.
The $5.6bn system’s investment staff criticized projected distributions from consultants.
The denominator effect caused the system’s private fund portfolio to soar in 2022. Staff believes a range will help it better manage the $80.1bn system’s private assets.
Fresno County’s investment officer is critical of projected distributions provided by third-party consultants.
Abbott Capital is looking for an extension for its 2008 flagship fund-of-funds and is encountering resistance from LPs contending with slowing cashflows and valuation uncertainty.