By Dale Kasler
Published: Wednesday, Feb. 24, 2010 – 12:00 am | Page 8B

CalPERS says it has lost $475 million on an investment that yielded controversial placement agent and former CalPERS board member Alfred Villalobos his biggest single payday.

The loss is based on June 30 figures and appears to have shrunk somewhat in the months since. Because the loss is still on paper, it could rebound some more before CalPERS chooses to sell it. Nevertheless, the deal remains deeply in the red, according to figures released Tuesday by the California Public Employees’ Retirement System.

The pension fund said its equity investment in New York financial giant Apollo Global Management had fallen to an estimated $124.6 million as of last June, the latest figures available. Cal-PERS paid $600 million for the investment in mid-2007, gaining a 9 percent equity stake in the firm.

The deal yielded Villalobos his biggest commission yet recorded, according to CalPERS records: $13.2 million.

That represents more than one-fifth of all the $59 million in commissions Villalobos has earned from CalPERS deals since leaving the pension fund’s board in 1995. He has made far more than any other placement agent who’s represented clients in front of CalPERS.

Villalobos is at the heart of an in-house inquiry CalPERS launched last fall into the activities of placement agents – middlemen hired by private equity firms like Apollo to help them obtain investments from public pension funds. CalPERS backs legislation that would ban commission payments and require agents to register as lobbyists.

Asked about Villalobos’ role in the Apollo investment, CalPERS spokesman Brad Pacheco noted that the probe is still under way. “We have previously said that the Villalobos fees sparked the review,” he said in an e-mail.

Judging the value of the Apollo equity stake is difficult. The investment doesn’t trade publicly. But shares trade sporadically on a private exchange run by Goldman Sachs. The most recent trades, from December, would put Cal-PERS’ shares at about $180 million. A spokeswoman said Apollo would have no comment on CalPERS’ estimate.

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