Beyond Fee Savings: How IPERS Uses Co-Investments to Build Investment Talent

Why does IPERS say NO to 95% of co-investment deals? Their CIO reveals the disciplined approach that attracts top practitioners to public service.

In Episode 13 of “The Institutional EDge,”  host Angelo Calvello explores an innovative co-investment approach with IPERS' CIO Sriram Lakshminarayanan and Senior Investment Officer Craig Payne. Managing $47 billion with a nine-person team, IPERS maintains a selective <5% co-investment acceptance rate while requiring three-week minimum diligence timelines. Beyond fee reduction, their coinvestment program serves as a deliberate talent development strategy, empowering staff to make consequential investment decisions while testing GP capabilities in real-time. The conversation reveals how hiring "practitioners of investments" creates a knowledge-based culture that attracts sophisticated talent to public service while elevating team conversations from manager selection to investment strategy.

Sriram Lakshmararayanan serves as Chief Investment Officer at Iowa Public Employees' Retirement System, overseeing approximately $47 billion in pension assets. He has transformed IPERS' approach to public and private markets, emphasizing cost-effective beta access and strategic co-investment practices. Craig Payne is Senior Investment Officer at IPERS, focusing on private asset investments including fund commitments and co-investments. With over two decades of private markets experience, Craig previously served as Managing Director and IC Member at BlackRock Private Equity Partners and brings deep expertise in co-investment diligence and portfolio construction to IPERS' innovative approach.

Craig Payne is Senior Investment Officer at Iowa Public Employees' Retirement System (IPERS), where he focuses on private asset investments, including fund commitments and co-investments across real assets and private credit. Craig brings over two decades of private markets experience to IPERS, most recently serving as Managing Director and IC Member at Transition Equity Partners (2022-23). Previously, he served as Director of Private Investments at Olympus Ventures (2020-2022), Managing Director and IC member at BlackRock Private Equity Partners (2007-2019). His earlier career includes roles at General Electric Equity as Vice President (2002-2006), where he managed a $1.6 billion portfolio. Craig holds a BA in Economics and Political Science from McGill University and an MBA in Finance, Entrepreneurship, Strategic Management, and Accounting from the University of Chicago.

In This Episode:

(00:00) Introduction to IPERS co-investment strategy and guest backgrounds

(03:29) Accessing beta cost-effectively across public and private markets

(07:02) Co-investments as a portfolio lever beyond simple fee reduction

(13:13) Independent diligence process and rubber stamp avoidance strategies

(19:24) Managing GP timelines while maintaining fiduciary responsibility standards

(23:39) Hiring practitioners over oversight managers for talent development

(33:25) Empowerment culture drives reten...

Chapters

• (00:00:00) - Cautious About Co-Investing
• (00:00:29) - The Private Market: Iowa Public Employees Retirement System
• (00:03:12) - Immortal Investors: Access beta as cost effectively as possible
• (00:08:17) - Control of the Private Market: Co Investments
• (00:11:19) - Is Co-Investment Necessary at IPers?
• (00:13:09) - Have We Co-Invested In Deals?
• (00:16:53) - How To Do Co-Investment?
• (00:18:56) - Prospective IP Deals: Can I Say No?
• (00:22:03) - What to Tell Your GP About a Co-Investment
• (00:23:10) - Does Craig's Co-Investment Process Influence My Hiring?
• (00:27:38) - Private Equity Companies' Approach to Co-Investments
• (00:34:23) - Craig Menear on Neural Networks
• (00:37:16) - In the Elevator With the Investment Managers
• (00:38:54) - Best Private Equity Pitch Ever Heard
• (00:41:20) - PNI