The California Public Employees' Retirement System (CalPERS), considered the largest pension fund in the US, has invested a total of $170 million in Israeli venture capital funds. $70 million was invested, through consulting firm Grove Street Advisors, in six funds - Pitango Venture Capital, Gemini Israel Funds, Carmel Ventures, Apax Partners, Israel Seed Partners, and Jerusalem Venture Partners (JVP), and a further $60 million directly in Giza Venture Capital and Markstone Capital Partners Group LLC.
Earlier this month, CalPERS reported a write-down of $50 billion, 20% of its managed capital, due to a fall in asset value. If in December 2007 CalPERS had $250 billion in assets under management, it now manages $190 billion.
The most successful Israeli fund at present is Carmel Ventures, which was launched in 2000 with $170 million. The internal rate of return (IRR) on the fund totaled 11%. So far, CalPERS has invested $6.7 million in the first Carmel Ventures fund, which is now worth $9.5 million, meaning an investment multiple of 1.4. The Gemini 3 fund, also launched in 2000 with $200 million, has generated a positive IRR of 3.6% on the money. CalPERS invested $7.2 million in Gemini, which is now worth $8.2 million, reflecting an investment multiple of 1.1. The JVP fund, launched in 2001 has just reached breakeven, and the return on it still isn't positive.
On the other hand, the Apax Israel 2 fund, launched in 1999, has recorded a negative IRR of 10% on the money. According to CalPERS data, Apax called $5 million, returned $2.6 million, and the overall value of the investment now stands at $3.5 million, meaning an investment multiple of 0.7. Israel Seed improved the balance sheet with a negative IRR of 10% on the money, after making a 40% write-down on paper out of the $220 million it currently manages. At the bottom of the list is Pitango 3, with a negative IRR of 9% on the money, after writing down almost 40% of the $500 million fund it raised in 2000.
Published by Globes [online], Israel business news - www.globes-online.com - on November 17, 2008
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