Medicine for Apollo?

16 November 2009 By Lauren Silva

The largest US pension fund is bothered by the fees it has paid Apollo. It has already endorsed calls for lower fees and giving investors in private equity more say. If Calpers does put the screws on Apollo, other big investors and other buyout firms won’t be far behind.

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Calpers is trying to restructure parts of its investments with private equity firm Apollo Global Management, according to the Wall Street Journal. The largest US pension fund is considering asking for lower management fees, cuts to its commitments and other concessions, the report said, following the delivery of a study prepared for Calpers by the investment bank Houlihan Lokey Howard & Zukin.

Calpers has a series of board and committee meetings scheduled this week. The pension fund declined to comment.

The Institutional Limited Partners Association released a report earlier this year outlining proposed new private equity investing best practices. The report said that management fees should cover normal operating costs for the firm and its principals and should not be excessive, and that transaction and monitoring fees should accrue for the benefit of the fund by offsetting management fees. Calpers endorsed the ILPA report.

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