CalPERS earmarks €400m for smaller Europe buyouts

US pension giant CalPERS has launched a €400 million, Europe-focussed buyout initiative, to be managed by the private equity division of Scotland-based investment manager Standard Life Investments Group.

The California Public Employees Retirement System has allocated €400 million ($552 million) to small and middle market European buyouts.

The capital will be managed in a fund dubbed ESP Golden Bear Europe Fund, and administered by the private equity division of international investment manager Standard Life Investments Group (SLIPE).

“We expect the ESP Golden Bear Europe Fund to shortly start making commitments to European private equity funds and we are looking to create a strong co-investment portfolio,” David Currie, chief executive of SLIPE, said in a statement.

Russell Read, CalPERS’ chief investment officer, said SLIPE’s relationships will allow the $247 billion pension access to top-tier managers and co-investment opportunities in Europe.

“We have a particular need for a partner who will focus exclusively on small to middle market European private equity,” Read said in a statement.

The ESP Golden Bear Europe Fund is the fifth alternative investment initiative CalPERS has launched in the last 18 months that steers capital directly toward smaller deals in various geographies.

In October 2006, the pension launched with advisory firm Hamilton Lane a $500 million private equity fund to target underserved and rural California companies, and also committed $400 million to a fund of funds for emerging managers, administered by Centinela Capital Partners. The following month, CalPERS committed $500 million to Sacramento Private Equity Partners, an investment vehicle managed by Oak Hill Investment Management that focusses on venture capital and small middle market private equity funds in the US. This year, the pension committed $175 million to fund of funds manager Asia Alternatives’ debut fund, which invests in smaller to middle market Asian funds.

SLIPE is headquartered in Edinburgh, Scotland and has an office in Boston. The firm provides both European and US private equity fund of funds services to clients from 24 different countries and has raised over $7 billion.

Its parent company will in October launch a new vehicle, SL Capital Partners, into which the business of SLIPE and the general partner companies, which govern the funds SLIPE run, will be transferred.