The new reality as we have discussed many times. The promised returns from VC, PE are just not there to provide the returns previously promised. Aivars Lode
Most California public employees are facing a 5% pay cut. Now the state’s largest pension system, CalPERS, wants its contractors to accept a similar reduction.
Fortune has learned that CalPERS last week sent a letter to 112 service providers, asking them to voluntarily help “reduce the operating expenses of the system.” Recipients included many firms that work with CalPERS’ private markets group, including Capital Dynamics, Cogent Partners, Hamilton Lane Advisors, LP Capital Advisors and Wilshire Associates.
Actual private equity fund managers did not receive the letter, with a system spokesman citing investment staff’s well-publicized efforts to hold down fees as part of the new commitment process. Chances are that there also were most-favored nation considerations, since a cut for CalPERS could result in a cut for all other LPs (something few PE firms would voluntarily accept).
The letters do not specify a target reduction, although the 5% appears to be guidance. CalPERS last issued a similar request back in 2009. At the time, CalPERS sent letters to 600 contractors and received 99 affirmative replies (to differing extents) that the system estimates saved it a little over half a million dollars.
Most California public employees are facing a 5% pay cut. Now the state’s largest pension system, CalPERS, wants its contractors to accept a similar reduction.
Fortune has learned that CalPERS last week sent a letter to 112 service providers, asking them to voluntarily help “reduce the operating expenses of the system.” Recipients included many firms that work with CalPERS’ private markets group, including Capital Dynamics, Cogent Partners, Hamilton Lane Advisors, LP Capital Advisors and Wilshire Associates.
Actual private equity fund managers did not receive the letter, with a system spokesman citing investment staff’s well-publicized efforts to hold down fees as part of the new commitment process. Chances are that there also were most-favored nation considerations, since a cut for CalPERS could result in a cut for all other LPs (something few PE firms would voluntarily accept).
The letters do not specify a target reduction, although the 5% appears to be guidance. CalPERS last issued a similar request back in 2009. At the time, CalPERS sent letters to 600 contractors and received 99 affirmative replies (to differing extents) that the system estimates saved it a little over half a million dollars.
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