CalPERS Forms Strategic Financial Relationship With The Yucaipa Companies; Up to $560 Million Committed to Venture to Build First-of-Its-Kind Integrated Merchant Bank.

Business Editors

SACRAMENTO, Calif.--(BUSINESS WIRE)--Feb. 4, 2002

The California Public Employees' Retirement System (CalPERS) announced today that it is teaming up with The Yucaipa Companies to establish a first-of-its-kind merchant bank holding company that will control subsidiary funds and businesses that provide financial services to public pension funds, Taft-Hartley pension funds, unions and union members.

CalPERS is committing up to $560 million in the Yucaipa American Funds (YAF), a holding company that will tap the assets of Taft-Hartley plans, as well as, public pension funds and invest them in buyout and private equity investments. These investments will focus on industries and companies that maintain strong corporate governance practices and are sensitive to the interests of their employees.

"This is a tremendous opportunity for us to be part of a growing and successful investment firm," said William D. Crist, President of CalPERS Board of Administration. "Yucaipa has built a strong track record by working in partnership with employees and with communities in which it invests and operates. This record uniquely qualifies the firm as a trusted source for private equity investments for Taft-Hartley and public pension funds."

CalPERS investment includes:

-- a $35 million commitment for a minority interest in YAF;

-- a $250 million commitment in future alternative investment funds and
businesses offered by Yucaipa, including buyout, fund of funds, and other
alternative asset businesses; and

-- a pre-negotiated option to invest up to $275 million in YAF.

According to industry reports, Taft-Hartley plans control over $400 billion in assets, but invest only one-tenth of one percent in private equity.

"Taft-Hartley plans can benefit along side public pension funds from an experienced, successful private equity investor like Yucaipa," said Michael Flaherman, Chair of CalPERS Investment Committee. "Given the scale of Taft-Hartley's assets, even a modest investment in private equity would represent tens of billions of dollars of capital, while providing an opportunity for them to diversify their investment pool.

"Yucaipa is commitment to invest in a manner that is sensitive to the interests of employees. We think that commitment provides a competitive advantage."

The Yucaipa Companies is led by founder and managing partner Ron Burkle and fifteen senior professionals with significant experience in finance, management and operations. Yucaipa, which was formed in 1986, has established a record of fostering economic value through the growth and responsible development of healthy companies and industries. Over the past 16 years, Yucaipa has completed 21 investment transactions worth over $14.6 billion, earning a gross internal rate of return of 45.1 percent.

CalPERS is the nation's largest public pension fund with assets totaling $147 billion. The System provides retirement and health benefits to more than 1.2 million State and local public employees and their families. For further information on CalPERS, please visit the System's web site at www.calpers.ca.gov.