CalPERS names new private equity investment executive

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The California Public Employees’ Retirement System, the country’s largest public pension fund, has named an investment executive to run its $49-billion private equity investment 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 after being caught in a spreading CalPERS corruption scandal.

Private equity generated annual returns of more than 17% for the teachers’ fund under Desrochers’ leadership in the decade before 2009, 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 the Saudi Arabian Investment Co.

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 in October 2007 before the Great Recession hit.

CalPERS currently faces more than financial difficulties. The 2,300-person agency, which serves 1.6 million state and local workers, their families and retirees, also is facing a morale crisis as it seeks to deal with a so-called pay-to-play scandal that has touched three former board members, a former chief executive and a number of outside investment consultants and managers.

Shahinian was mentioned in a 2010 state attorney general’s lawsuit for taking gifts of luxury travel to New York City to attend a charitable dinner honoring the chairman of Apollo Global Management, Leon Black.

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. The gifts to Shahinian were not reported as required by state law.

Shahinian later recommended that CalPERS purchase a 9% stake in Apollo.

Neither Shahinian nor Black have been charged with any wrongdoing.

-- Marc Lifsher