Illinois Teachers’ commits $175m to private equity

The $27bn US public pension has backed three private equity funds and also raised its target allocation to compensate for the denominator effect.

The Teachers’ Retirement System of Illinois has committed $175 million to private equity and hiked its allocation from 8 percent to 10 percent to make up for over-weighting to the asset class.   

The pension, with total assets of $27.2 billion as of 31 March, gave $25 million to Clearlake Capital Partners II through its emerging managers’ programme. Illinois Teachers’ has dedicated $500 million to the emerging managers’ programme since 2005.

Clearlake Capital Partners II is a distressed debt fund targeting $500 million for investments in companies in the US and Canada.  Clearlake was founded in 2006 with its debut fund totaling $200 million, all from a single limited partner, Reservoir Capital.

The pension also committed $50 million to Energy Capital Partners II, a buyout fund focused on the power generation and energy sectors, and $100 million to GSO Capital Solutions Fund, a distressed debt fund that is reportedly targeting $3 billion.

Illinois Teachers’ actual allocation to private equity is at about 9 percent and the pension is over-weighted to the asset class, according to a spokesperson. The fund’s total assets under management has shrunk in the market turmoil, driving up its exposure to private equity as a percentage of total assets. This is known as the denominator effect.