Pension Funds Raise the Stakes in Buyout Game

Little old ladies and leveraged buyouts rarely appear in the same sentence.

But some retirement funds are quietly beginning to plow billions of dollars of those ladies’ pensions directly into supersized takeover deals, joining with — and in some cases even sidestepping — private equity funds.

While pension funds have long doled out money to private equity firms to invest for them in deals, some funds are increasingly looking to play the role of Henry R. Kravis instead of the passive investor.