New York state Comptroller Thomas DiNapoli hired an investment firm co-founded by Penny Pritzker, a top fundraiser for President Barack Obama, to find money managers owned by women and minorities who’ll invest $300 million of state pension cash.
DiNapoli, a Democrat, chose Artemis Real Estate Partners to handle the $146.9 billion New York State Common Retirement Fund’s first investment in “emerging managers” for real estate, the comptroller said yesterday in a statement. Pritzker, a Chicago billionaire, helped raise a record $745 million for Obama’s 2008 campaign.
“With the emerging-manager program now in place across our asset classes, the fund has affirmed its status as an innovator in the field and shown once again its commitment to enhancing diversity and opportunity while improving its bottom line,” DiNapoli, 57, said.
The comptroller is the sole trustee of the pension fund, the third-largest in the U.S. Last year, DiNapoli allocated $200 million to the Rock Creek Group, a hedge fund of funds run by Afsaneh Mashayekhi Beschloss, a former World Bank chief investment officer who is married to presidential historian Michael Beschloss.
Pritzker’s political connections and reputation as a prodigious fundraiser had nothing to do with her firm’s selection, said Eric Sumberg, a DiNapoli spokesman. State pension officials received proposals from 25 applicants and interviewed more than 10, he said.
“It was a very competitive process,” Sumberg said by telephone. He declined to disclose how much Artemis will be paid.
Pritzker, who is also chairman, president and chief executive officer of Pritzker Realty Group LLC in Chicago, didn’t immediately respond to a voice mail left with an assistant.
Following a pay-to-play scandal involving New York’s former comptroller Alan Hevesi, DiNapoli in 2009 prohibited the state pension from doing business with any investment adviser who has made a political contribution to the holder of or a candidate for his office. Hevesi admitted getting almost $1 million in payments and favors for himself and his friends from investment firms in return for hiring them to manage pension assets.
Pritzker serves on Obama’s Council on Jobs and Competitiveness, which advises his administration on economic growth and employment. She is also chairman of TransUnion Corp. in Chicago, a director of Hyatt Hotels Corp. (H) and is a trustee of Stanford University and the John F. Kennedy Center for Performing Arts in the nation’s capital.
Artemis, based in the Washington suburb of Chevy Chase, Maryland, “seeks to deliver attractive risk-adjusted returns to investors and manage institutional third-party capital in a variety of real estate strategies, with its co-founders and principals investing significantly alongside its investors,” according to the firm’s website.
The company’s co-founder and CEO is Deborah Harmon, the former president and chief investment officer of the J.E. Robert Cos., a real-estate investment firm. The firm’s founders have made more than $25 billion in real estate investments during their careers, according to DiNapoli.
“We are excited to execute this strategic mandate to create joint-venture partnerships with established and newly formed emerging managers,” Harmon said in the statement from DiNapoli’s office.
The state pension fund currently invests about $6 billion with emerging managers. The goal of the program is to invest assets with smaller, newer firms with a focus on women and minority-owned enterprises, according to the statement.
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