Illinois Teachers’ commits €50m to Oaktree

The $38.4bn retirement system has approved a commitment to the distressed debt specialist as well as a tactical plan for re-evaluating its real estate strategy.

The Teachers’ Retirement System of the State of the Illinois (TRS) has approved a €50 million ($77.4 million) commitment to Oaktree Capital Management’s second European Principal Opportunities Fund. The fund is targeting €1.25 billion for distressed debt investments, according to the Probitas Partners 2008 Private Equity Deskbook.

The $38.4 billion public pension approved the commitment at a board meeting today. TRS provides benefits to teachers and administrators employed at Illinois public elementary and secondary schools outside the city of Chicago.

Los Angeles-based debt specialist Oaktree, led by chairman and co-founder Howard Marks, closed the largest ever distressed debt fund on $10.9 billion in May. The OCM Opportunities Fund VIIb included $10.6 billion of limited partner commitments and $300 million from Oaktree executives

Distressed debt has attracted increased investment of late. Avenue Capital is raising its fifth fund targeting $4 billion, more than twice the size of its predecessor while BlackRock is targeting $3 billion for its debut distressed debt fund, according to the Probitas Partners 2008 Private Equity Deskbook.

During the meeting, TRS also called for the inclusion of more emerging managers in its commingled real estate funds and for a re-evaluation of its five-year real estate investment strategy.

TRS has an 8 percent target allocation for private equity and an actual allocation of 5.2 percent, according to PEO’s sister database Private Equity Connect.