CalPERS has $67 million exposure to stricken Silicon Valley Bank, the high-profile venture capital and start up lender shut down at the end of last week by regulators and taken over by the Federal Deposit Insurance Corporation after customers raced to withdraw their money.
In addition the giant pension fund also has $11 million exposure to Signature Bank, chief of the fund’s investment officer, Nicole Musicco, told the board during the $457.4 billion fund’s latest investment committee meeting.
Musicco said that “in the grand scheme of things” CalPERS’ assets at risk are a small percentage of its assets under management. And that a “tumultuous” and “wild weekend” as the banks unravelled proved the importance of CalPERS’ resilience and transparency.
The collapse of the banks could be a pivotal moment for private equity and venture capital groups given SVB is a significant lender to GPs and their portfolio companies.
CalPERS is among the funds building its private equity exposure in recent years.
Musicco said resilience, transparency and innovation are now core tenets of how CalPERS executes.
The investment team was quick to identify the level of exposure, and in a “shout out to the team” she said she had received detailed analysis over the weekend as the situation unfolded.
Moreover, the process has shown that CalPERS’ liquidity framework is robust, evident that lessons have been learnt “in how we manage liquidity.”
The turmoil has also highlighted how CalPERS is now perceived by partners. Mussico said she has received a “number of calls” in recognition that the investment community now sees the giant pension fund as a strategic partner with balance sheet and the agility to provide long-term capital and solutions.
Although CalPERS has “nothing right now in the works,” she said her phone continues to buzz. “The message is out” that CalPERS is “open for business.”
Other institutional investors that have announced losses and exposure to SVB and Signature Bank include Norway’s sovereign wealth fund and Sweden’s largest pension fund Alecta.
Alecta has reported heavy losses to SVB, Signature and First Republic Bank, amounting to €1.2 billion – around 1 per cent of its total managed capital – according to a statement.
Alecta began investing in SVB in June 2019 and made its last investment in November 2022. The pension fund is the fourth largest shareholder in SVB.
“Alecta now values the shares in the two banks at zero,” the pension fund said, adding that the effect on Alecta’s customers would be small and its own financial position was “very strong.”
Elsewhere, reports in the Korean press say that Korea’s National Pension Service is considering all possible measures in relation to its investment in the US bank, with a reported 100,000 shares in SVB.
This article was edited on March 19, 2023, to update CalPERS’ exposure to Signature Bank