Two more limited partners that answer to the public have disclosed internal rates of return as a result of Freedom of Information Act requests. First up was The University of Michigan, which disclosed the value of all the funds in its private equity portfolio in early March. Shortly thereafter the California State Teachers’ Retirement System (CalSTRS) did the same. McKinsey & Co. shed some light on the IRRs for 110 private equity funds when it completed its semi-annual review of CalSTRS’ $4.1 billion private equity portfolio. CalSTRS’ has about 130 private equity funds in its portfolio and had been working since November to get all its general partners to waive confidentiality agreements that bar the pension fund from reporting fund performance to the general public. Since last September when McKinsey reviewed the pension fund’s private equity fund, Kohlberg, Kravis & Roberts, New Enterprise Associates and Welsh, Carson, Anderson & Stowe have agreed to allow CalSTRS to disclose their IRRs. CalSTRS is continuing negotiations with those that have not yet waived the confidentiality agreements and plans to have a complete list by the time McKinsey & Co. makes its next semi-annual performance report in September.
As of Sept. 30, the overall CalSTRS program reported a 1-year loss of 7.2%, that’s better than Venture Economics’ weighted pooled mean loss 11.2% during the same period. CalSTRS’ buyout funds were down 4.5% for the year, while venture capital funds lost 20.1% of their value during the year. The program has returned 16.2% to the pension fund since it was initiated in 1988.
More than 70% of the $4.1 billion portfolio sits in buyout funds, while 23% sits in venture capital funds, mostly early-stage funds. The rest is invested in distressed debt, mezzanine and secondary funds. The fund’s capital contributions to general partners totaled $1 billion in 2002, while the program’s unfunded commitments to 127 funds now total $10.5 billion.
The University of Michigan disclosed IRRs of about 100 private equity funds (see page 60). According to University of Michigan’s numbers, Matrix Partners outperformed esteemed Kleiner Perkins Caufield & Byers in the 1990s as well as Sequoia Capital and Battery Ventures.
The nation’s largest private equity investor, California Public Employees’ Retirement System (CalPERS) disclosed its results in December and University of Texas’ Investment Management Company made its disclosure in November.