When the California Public Employees’ Retirement System announced last month that it was abandoning hedge funds, the nation’s largest public pension system cautioned that it would need at least one year to “strategically exit” its $4 billion of existing investments. This sounded like it would slowly redeem its way out of the asset class, but the process may go much more quickly.
Sources familiar with the situation say that CalPERS already has received multiple indications of interest for some or all of its hedge fund holdings from other state pension funds. One of the sources identifies The State of Wisconsin Investment Board as a suitor, which makes sense given that it remains below its target exposure to hedge funds.
It is unclear what types of prices are being offered, as some prospective buyers may believe CalPERS to be a motivated buyer that is willing to accept deep discounts.
A CalPERS spokesman declined to confirm interest from other state funds, except to say that CalPERS will “evaluate all possibilities” with the portfolio. He added: “Ultimately, we will exit those investments in a manner that best serves the interests of the fund.”
A Wisconsin Investment Board spokesman declined comment, saying the pension does not publicly discuss “investment strategy.”
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