Exclusive: CalPERS considers KKR account

The nation’s largest pension system considers a new type of alternative investment commitment.

I’ve been giving thought to 2012 storylines in private equity. One of them certainly will be the rise of large custom managed accounts, of the type recently agreed upon by the New Jersey Division of Investment with The Blackstone Group (BX) and the Texas Teachers’ Retirement System with Apollo Global Management (APO) and Kohlberg Kravis Roberts & Co. (BX).

For big public pensions, it’s a chance to put billions of dollars to work in one fell swoop, diversify their alternative investment exposure and receive deeper market insights from asset managers who now arguably view the pension more as a real partner than just another investor. For the PE firms, particularly publicly-listed ones, it’s a great way to increase long-term assets under management and make future fundraising a bit easier (albeit at the expense of premium fees).

So it shouldn’t be surprising to learn that the country’s largest public pension system, CalPERS, is in talks with several large PE firms about forming custom managed accounts. The one name I’ve heard repeatedly has been KKR, although I wouldn’t be surprised if The Carlyle Group and Apollo also were in the mix (given that CalPERS owns minority ownership positions in each firm). No comment from CalPERS or KKR, natch.

If CalPERS does consummate one of these arrangements, I’d assume that it will be more forthcoming with specific details than has been Texas TRS – a system that says its arrangements will be “ILPA-compliant” but refuses to explain exactly what that means (let alone disclose fee arrangements). Texas TRS also will not disclose the other PE firms on which it conducted due diligence, denying system beneficiaries of context in judging the TRS selections (word is that certain PE firms balked at the terms offered by TRS, but we still don’t know who).

These accounts may make a whole lot of sense, but I’m hoping that they don’t become some sort of fund-of-funds shield for adequate public transparency…

Sign up for my daily email newsletter on deals and deal-makers: GetTermSheet.com 

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.