Questioning California’s Pension Fund Bill

March 25 - N.Y. Times Blog (DealBook) - Many in the buyout industry are taking a skeptical view of a California bill that would bar Calpers and CalSTRS, two of the nation’s largest pension funds, from allocating funds to private equity firms that have sold stakes to sovereign wealth funds.

The bill is co-sponsored by the Service Employees Union International, a union that has loudly criticized many of the largest buyout firms, arguing that their leveraged buyouts are hurting the average worker. In proposing the measure, the union sought to draw attention to the questionable human-rights records of some of the countries whose government-controlled funds, known as sovereign wealth funds, have invested in American buyout firms.

Charlene Davidson of RSM EquiCo Capital Markets suggested the legislation is a knee-jerk reaction to the increased activity from foreign state-sponsored investment funds. “It appears to be more of a reactionary maneuver than a research-based action,” she told the Digest. Read More.