The California Public Employees’ Retirement System (CalPERS) announced that it has committed $50 million to Clearlake Capital, a California-based private equity firm. The commitment to Clearlake was one of only ten that CalPERS made in its Private Equity Program during 2012, and one of only four commitments to new managers.

Clearlake was previously part of CalPERS Emerging Manager Program through an investment in a fund-of-funds. The new commitment is a direct investment. The fund, Clearlake Capital Partners III, will make distressed and special situations investments in small and medium-sized companies.

“Clearlake demonstrated through its performance, investment discipline and governance characteristics what CalPERS is looking for in its private equity portfolio,” said Réal Desrochers, CalPERS Senior Investment Officer for Private Equity. “They are also the perfect illustration of what we hope to achieve with our emerging manager program.”

The objectives of CalPERS Emerging Manager Programs are to generate appropriate risk-adjusted investment returns by identifying the next generation of funds with potential for strong investment performance. They also seek to gain access to investment opportunities that may otherwise be overlooked and cultivate the next generation of external portfolio management talent.

CalPERS commitment to emerging and diverse managers was recently summarized in its Five-Year Emerging Manager Plan. The plan examines what CalPERS has learned from more than 20 years of investing with emerging managers, supplemented by data and insight from key stakeholders, in an effort to develop and apply an effective approach for engaging with emerging managers as a component of the System’s investment strategy.

“We remain committed to investing with emerging and diverse managers, but it is also clear that the market environment today is much different than it was six or seven years ago,” said Ted Eliopoulos, Acting Chief Investment Officer for the Fund. “We have had to make tough decisions, including reducing the number of managers we can fund, following the financial crisis.”

CalPERS committed $36.7 billion to private equity firms during the two years between 2006 and 2008, approving more than 130 funds. Since then the Fund has deployed $5.2 billion in capital to 23 funds.

CalPERS is the largest public pension fund in the U.S. with approximately $260 billion in assets. The retirement system administers retirement benefits for more than 1.6 million current and retired California State, public school and local public agency employees and their families on behalf of more than 3,000 public employers in the state, and health benefits for 1.3 million enrollees. For more information about CalPERS, visit www.calpers.ca.gov.