Illinois Teachers’ commits $65m to two funds

The Teachers' Retirement System of Illinois made commitments to Onex Partners III and StarVest Partners II despite losing $4bn of value since the end of September. The pension is studying possible allocation changes to adjust to struggling markets.

The Illinois Teachers’ Retirement System awarded new fund commitments last week, including $50 million to buyout fund Onex Partners III and $15 million to StarVest Partners II, a tech-focused fund.

Onex’s third fund, which focuses on investment opportunities in the mid-market, is targeting $4.5 billion and reached $2.4 billion in August. Onex expects the fund to close in early 2009.

The investment is TRS’ first in Onex, a TRS spokesperson said.

TRS’ investment in StarVest comes from the pension’s $500 million TRS Emerging Manager Program. StarVest is the first private equity manager to be included in the programme since it was expanded in June to include private market investments, TRS said.

TRS has invested $240 million in the programme, which provides support to young firms to help them grow. StarVest is targeting $200 million for its second fund, with a hard cap of $250 million. The fund has raised $229 million so far.

The board authorised the new commitments despite an 11 percent drop in the market value of TRS’ fund from $34 billion as of 30 September to $30 billion as of 31 October. The fund has an 8 percent target allocation to private equity, and had an actual allocation of 7.5 percent as of 30 September, according to a spokesperson for the pension.

“Given the drop in market value, our actual commitment is very close to our 8 percent target,” the spokesperson said.

The TRS board also terminated its relationship with Neuberger Investment Management, formerly Lehman Brothers’ asset management arm. A Lehman management group won a bankruptcy auction Wednesday to buy Neuberger and turn it into an independent company.

TRS fired Neuberger, which managed $903 million in fixed income for TRS, because of performance issues and because of organisational changes within Neuberger, the spokesperson said.