CalPERS to Invest in Australian Fuel Firm

The California Public Employees Retirement System has made its first investment under a deal announced a year ago, apparently winning--in tandem with Enron Corp.--a bidding war for Bridge Oil Ltd., an Australian producer of oil and gas.

CalPERS, the nation’s largest public pension fund, said last July that it would invest $250 million of its $75 billion in assets in a partnership with Houston-based Enron, the largest natural gas producer in North America.

Other pension funds have made direct investments like the Australian deal, but the CalPERS-Enron transaction is one of the largest ever.

“These (deals) are going to increase as (funds) look for different investments in their portfolios,” predicted Foster H. Corwith, a first vice president with Dean Witter Reynolds. “There are opportunities here that you couldn’t do with a straight retirement fund.”

CalPERS fund managers say they hope to eventually have as much as 2% of their portfolio in such direct investments--so called because they do not involve investment bankers and related fees. Pension funds traditionally invest in bonds, stocks or real estate, paying fees ranging from 2% to 5% of the value of the investment.

“Part of our rationale for these sorts of direct placements are fee structures that are favorable to us,” said Jed Maxwell, the fund’s principal investment officer.

The takeover bid of 85 cents (Australian) per share for Bridge Oil beat an 80-cent bid by Parker & Parsley Petroleum Co. of Midland, Tex., and brought the price for Bridge to about $263 million in U.S. dollars.