The Teachers’ Retirement System of the State of Illinois (TRS) will make between $800 million (€516 million) and $1.2 billion in private equity commitments during the 2008 fiscal year beginning 1 July.
The $38 billion public pension, which during the 2007 fiscal year committed $1.37 billion to private equity, approved the plans last week as part of a “private equity road map” designed to help it reach an 8 percent allocation target.
“TRS believes this commitment range will help the system reach its long term allocation goal because TRS exceeded that range during the current fiscal year and because the market value of the overall assets is lower due to volatility in the public markets,” a spokeswoman told PEO.
It currently has roughly 5.8 percent of its total portfolio, or $2.2 billion, invested in private equity.
TRS approved the allocation target in December 2006, having previously had a 6 percent target, and began implementing it 1 July 2007.
The asset class has consistently been one of its top performers, TRS said in a statement. Last year it returned a record 31.3 percent, helping to boost the plan’s overall return to 19.6 percent, a level unseen since the 1980s.
TRS said private equity has yielded a nearly 20 percent return over the past 10 years.
Its road map maintains existing exposure levels to particular types of private equity funds, with roughly 60 percent to 80 percent of its capital being allocated to buyout funds; 10 percent to 25 percent to venture capital; and 5 percent to 20 percent to special situations. The one caveat is that the road map emphasises a greater need to support European funds to increase geographic diversity, the spokeswoman said.
“Specifically, TRS will continue to pursue new investments with some of its existing general partners, particularly those who are raising large buyout funds,” the spokeswoman said. “Additionally, TRS will seek new investment opportunities in middle market buyout funds.”
Smaller commitments are typically made to venture capital and special situations funds, including mezzanine debt, she added.
The managers with whom TRS typically invests include Apollo Management, Avenue Capital, Elevation Partners, GTCR Golder Rauner, JC Flowers, Riverstone Holdings, Oaktree Capital Management, Providence Equity Partners, Shasta Ventures and Trivest.
It recently expanded its emerging managers programme, previously focussed on public equity managers, to include nascent private equity and real estate firms.