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News & Policy

PBGC Hires Strategic Partners For $2.5 Billion in Private Equity, Real Estate

December 22, 2008

WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced the selection of investment firms BlackRock, Goldman Sachs and J.P. Morgan as strategic partners to manage $2.5 billion in assets and provide support to PBGC's in-house investment staff.

"These new strategic partners will do much more than manage assets," said Director Charles E.F. Millard. "Our strategic relationships will be long-term in nature, and will add tremendous value for the PBGC going forward."

The PBGC's strategic partners will manage the Corporation's allocations to private equity and real estate, asset classes added to its portfolio under the diversified investment policy adopted last February by the PBGC Board of Directors. In addition, each partner will offer specialized services that build the Corporation's institutional capacity. Through these strategic partnerships, the PBGC intends to leverage each firm's full array of financial, quantitative and qualitative resources.

After an exhaustive due diligence process, the PBGC selected its partners from firms responding to a request for proposals published according to federal procurement procedures.

"Our first criterion for prospective partners was an excellent track record in allocating to private equity and real estate," said Millard. "These firms are world leaders in both fields. Second, the firms had to demonstrate their commitment to a complete partnership. They will be required to share information among themselves and give the PBGC unrestricted access to all intellectual firepower within their respective firms.

"These relationships will benefit the PBGC, not only with private equity and real estate investments, but in risk analytics and mitigation, consolidated reporting and staff augmentation. These resources will put the PBGC on a more strategic foundation for its future."

"Institutional investors at the forefront of best practices are adopting the strategic partnership approach to gain access to world-class intellectual resources," said Laurence D. Fink, Chairman & CEO of BlackRock. "We are proud that the PBGC has chosen BlackRock as a strategic partner to help manage its assets, while also providing best-in-class risk management services through BlackRock Solutions. We look forward to working alongside PBGC's other strategic partners, Goldman Sachs and J.P.Morgan, to serve this important Corporation and the American workers and retirees it serves."

"The PBGC joins a group of sophisticated investors at the forefront of the institutional investment community with this forward-thinking program," said Gary D. Cohn, President and Co-Chief Operating Officer, The Goldman Sachs Group, Inc. "We are delighted with this significant commitment to our alternative investment strategies. The PBGC will be a strategic partner with access to our world class proprietary and open architecture capabilities, along with the co-investment opportunities, resources, and intellectual capital of Goldman Sachs Asset Management. We look forward to supporting PBGC's already substantial in-house investment capabilities."

"J.P. Morgan is pleased to have been chosen to partner with the PBGC," said Jamie Dimon, Chairman and Chief Executive Officer, JPMorgan Chase & Co. "This partnership is at the leading edge of combining sophisticated, best-in-class investment management with strategic investment advisory services. We're proud that the experience and exceptional talent within our asset management business will have a significant role in offering prudent and innovative solutions for this critical federal government agency."

The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in more than 29,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by PBGC's investment returns.

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PBGC No. 09-08