CalPERS Now Champions VC Disclosure

March 12, 2003 ( - The California Public Employees' Retirement System (CalPERS) now says it wants to work with other large investors to develop standards for reporting valuations and returns on private-equity investments.

The $133-billion pension fund, which had initially resisted public disclosures of its private equity holdings on the premise that such disclosure threatened its ability to make future investments, says it hopes to strike a balance between the need to be accountable for its investments and its fiduciary duty to maximize investment results that will be acceptable to fund managers.

The Alternative Investment Management Disclosure Plan, which has been posted on CalPERS’Web site , will include Web site postings of:

  • cash in and cash out
  • overall rates of return for venture capital funds
  • performance by “fund to fund” investment advisers, previously unreleased.

Additionally, the pension fund announced plans to post a section on its Web site explaining how private-equity investments are made and how alternative asset classes, like venture capital, work.   CalPERS’ board is set to vote on the plan March 17.

However, what will not be released by the nation’s largest public pension fund is information about individual portfolio companies. The pension fund said that releasing such information should be left up to the particular private equity firm and could potentially have a negative impact on the underlying company.   CalPERS initially released performance data on its private equity investments only as part of a settlement to the lawsuit brought by the San Jose Mercury News last year  (See  CalPERS to Go Public With Private Equity Info ).

CalPERS’ plan comes as part of a broader proposal to develop, in conjunction with the venture industry a disclosure policy for private equity information providing transparency, yet holding consistent with the fund’s fiduciary duty to its members to maximize investment returns. The pension fund is further urging “other industry participants to work together to develop and adopt global standards in private equity reporting and valuation in the next 12 months,” according to the disclosure plan.

But at least one public pension fund is raising questions as to its ability to release such information. The University of Texas Management Co (UTIMCO) has said it is seeking a new opinion from the state’s attorney general as to whether it can release performance data without the approval of individual venture funds. The state’s previous attorney general had ordered the data released.