CalPERS names new private equity investment executive
The California Public Employees’ Retirement System, the country’s largest public pension fund, has named a new investment executive to run its $49-billion private equity portfolio.
Real Desrochers, who spent a decade doing a similar job for the California State Teachers’ Retirement System, replaces Leon Shahinian, who resigned in August. He left the agency after being put on administrative leave in the wake of a spreading corruption scandal at CalPERS.
Shahinian was mentioned but not named as a defendant in a 2010 lawsuit filed by then-Atty. Gen. Jerry Brown against a former CalPERS board member and agency chief executive.
The civil complaint said Shahinian took gifts of luxury travel to New York City to attend a charitable dinner honoring the chairman of Apollo Global Management, Leon Black. Shahinian later recommended that CalPERS purchase a 9% stake in Apollo.
Alfred J.R. Villalobos, a former CalPERS board member turned middleman dealmaker, picked up most of Shahinian’s tab on behalf of his client, Apollo. Villalobos and former CalPERS Chief Executive Federico Buenrostro Jr. were the two defendants sued by the California attorney general. Neither Shahinian nor Black has been charged with any wrongdoing, and Shahinian could not be reached for comment.
Desrochers joins CalPERS as the country’s largest public pension fund, with $236 billion in assets, is clawing its way back from losing $100 billion between late 2007 and early 2009. The fund reached an all-time high of $260 billion before the recession hit.
CalPERS faces more than financial difficulties. The 2,300-person agency, which serves 1.6 million state and local workers, their families and retirees, is facing a morale crisis as it seeks to deal with a so-called pay-to-play scandal that has touched a number of former top officials and outside investment consultants and managers.
Current CalPERS investment managers say they are confident that Desrochers’ investment track record shows he can make a big contribution to rebuilding the pension fund. Private equity generated annual returns of more than 17% for the teachers’ retirement fund under Desrochers’ leadership, CalPERS Chief Investment Officer Joseph Dear said.
Earlier in his career, Desrochers worked for Canada’s largest pension fund, Caisse de Depot of Quebec. After leaving CalSTRS, he advised a number of investors, including Blackstone Capital, J.H. Whitney, Texas Pacific Group, Permira and China Renaissance Industries. He also was chief investment officer for Saudi Arabian Investment Co.
