CalPERS, Apollo Strike Deal On Fees

Apr 20 2010 | 12:02pm ET

The nation’s largest public pension fund has struck a sweetheart fee deal with private equity giant Apollo Global Management.

The New York-based firm has agreed to cut the fees charged to the California Public Employees’ Retirement System by $125 million over the next five years, the two sides said in a joint statement. In return, CalPERS has agreed to fund its existing capital commitments to Apollo, which total $943 million in uncommitted capital.

CalPERS has a total of $4.3 billion in commitments to Apollo, more than $3 billion of which has already been committed. New York-based Apollo has more than $53 billion in assets under management.

In addition to the fee breaks, Apollo has also pledged not to use placement agents. The firm will give CalPERS a quarterly certification that it has neither used nor paid placement agents to win business from the $200 billion pension.

The fee reductions will come from $2 billion in separately-managed fixed-income accounts that Apollo manages exclusively for CalPERS, which owns a 9% stake in Apollo.

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