Calpers Said to Sell Stake in Aurora Resurgence
California Public Employees’ Retirement System, the largest U.S. pension plan, agreed to sell its anchor stake in a 2007 fund managed by the distressed-investment unit of Los Angeles-based Aurora Capital Group, according to two people familiar with the matter.
Other investors in Aurora Resurgence Fund LP would also have the option of either selling their stakes to a group led by Carlyle Group LP’s AlpInvest Partners NV or rolling investments into a new fund, said the people, who asked not to be identified because the sale is private. The new fund, backed by AlpInvest and the investor group, will purchase companies from the existing fund and invest in future transactions as part of the deal, which is valued at $500 million to $600 million, according to one of the people.
Aurora Resurgence has faced a number of departures in its senior ranks, including that last year of chief executive officer Anthony DiSimone. Calpers, whose $400 million commitment to the fund in 2007 made it the vehicle’s largest investor, has been paring down its $42 billion private-equity portfolio to focus on the best-performing managers.
The size of the deal led by AlpInvest would include Aurora Resurgence’s unfunded commitments, net asset value of investments and capital for future deals, according to one of the people familiar with the matter.
Park Hill Group LLC, the placement-agent arm of Blackstone Group LP, is advising Aurora Resurgence on the deal. Bryan Darrow, a spokesman at Joele Frank, declined to comment on behalf of Aurora Resurgence. Emily-Jane Finigan, a spokeswoman at AlpInvest, declined to comment. Joe DeAnda, a Calpers spokesman, said he couldn’t confirm the stake sale.
The Aurora Resurgence transaction is intended to establish a new fund led by Steven Smith, Gerald Parsky and Ryan McCarthy, according to another person briefed on the matter. Smith, who is a managing partner of Aurora Resurgence, joined from UBS AG last year. McCarthy, who was a principal in the group, was promoted to partner in 2011. Parsky is the founder and chairman of Aurora Capital Group, an investment firm that manages more than $2 billion in strategies including traditional private-equity funds.
Some limited partners wanted to sell their positions in Aurora Resurgence because of the change in fund leadership, another person familiar said.
Aurora Resurgence Fund LP raised $636 million in 2007. DiSimone left last year to lead new private-equity firm Peak Rock Capital. Peter Leibman and Robert Strauss, principals at Aurora Resurgence, and Steve Martinez, a managing director, also left to be part of the executive team at Peak Rock.
Aurora Resurgence invests in debt and equity securities of middle-market companies with at least $100 million in revenue, according to its website. It focuses on complex situations such as acquisitions of divisions owned by corporations.
Aurora Resurgence Fund LP was generating a 17.2 percent internal rate of return and a 1.7 times multiple as of June 30, according to performance data by Oregon Public Employees Retirement Fund. The fund was almost 84 percent invested as of that date.
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