CalPERS boss pushed sports deals before calling it quits

By Eliyahu Kamisher and Dawn Lim | Bloomberg

In her first year atop the California Public Employees’ Retirement System as chief investment officer, Nicole Musicco gathered dozens of staff and laid out an ambitious vision for the largest US public pension fund.

She desired innovation, she told the audience at its Sacramento headquarters. She wanted “stadium deals” and identified professional sports as a frontier for more investing.

During her tenure the fund explored buying a stake in its hometown basketball team, the Sacramento Kings, said people familiar with the matter. CalPERS also invited Tony Ressler, the billionaire Ares Management co-founder who owns the Atlanta Hawks, to speak to its board.

But Musicco’s plans for transforming the $463 billion pension fund — informed by her background at pioneering Canadian public pensions and an investment shop known for sports deals — would never come to pass. On Friday, the 49-year-old resigned after just 18 months, the latest in a string of abrupt exits from the role in recent years. CalPERS said she was leaving “to attend to the immediate needs of family” in Canada.

“I care deeply about the work we do and about serving those who serve California, but right now my family needs me back in Toronto,” Musicco said in an emotional speech at a CalPERS board meeting on Monday. “As difficult and awkward and far from ideal that is for all of us, this is what I need to do.”

The abrupt exit has created yet another leadership vacuum at an institution that is notoriously tough to manage, shining a light on the high wire that CalPERS CIOs walk. They answer to an often-quarrelsome 13-member board – some of them elected and prone to airing differences in public – while navigating the sometimes-conflicting viewpoints of politicians and career staffers over how to provide for the retirement of the state’s public workers.

Musicco’s attempt to import the so-called Canadian investment model, which emphasizes direct investments to reduce the fees paid to outside managers, didn’t sit well with key investing staff at CalPERS, because there was no clear path communicated on how to do it, according to people close to the pension who were not authorized to speak publicly.

Some were also irked by Musicco’s focus on sports, technology and venture capital investments, saying she hadn’t clearly outlined how CalPERS would pull off such deals, and specifically, how such a massive institution could successfully deploy money at scale and move the needle on returns. It didn’t help that she was frequently absent from the office as she commuted from her family’s home in Toronto, said people familiar with the matter.

At the board meeting, Musicco defended her approach.

“There will always be a small minority that fights change,” she said. “But the vast majority of this team embraced change from the start and our mission to create the kind of culture that CalPERS truly needs in order to be best-in-class and deliver its promise to its members.”

CalPERS spokesperson John Myers said Musicco was hired with the full backing of the pension …read more

Source:: The Mercury News – Entertainment


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