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CalPERS May Buy a Stake in Sports Capital Partners

February 15, 2001|From Bloomberg News

The California Public Employees' Retirement System, extending its venture capital bets, is considering putting $122 million into a firm that funds sports-business start-ups.

CalPERS, the biggest U.S. public pension fund, would buy a stake in Sports Capital Partners from J.P. Morgan Chase & Co., said a briefing memo prepared by the staff.

The $170-billion pension fund would pay $22 million for the bank's $37.5-million stake--including management fees of $7.5 million and invested capital of $30 million--a 40% discount, the memo said. It would also assume J.P. Morgan Chase's commitment to invest $62 million and add a commitment for $38 million.

"Sports and entertainment businesses have historically exhibited rapid growth, driven by strong consumer demand and demographic trends, and have been relatively insulated over time from economic cycles," the memo said. "In addition, major private equity firms are not directly focusing on this area of the market."

The CalPERs board is scheduled to vote on the investment Tuesday. A bank spokesman wasn't immediately available to comment.

Sports Capital Partners was created in March 1998, with commitments of $167 million, to trade on the connections of IMG, the world's largest sports marketing and management firm. IMG clients include Tiger Woods and Andre Agassi. It represents or advises the four Grand Slam tennis events.

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