Illinois Teachers' expands ‘emerging managers’ programme

The $41.7bn retirement system has also committed $38.9m to Avenue Capital Group’s first European fund.

The $41.7 billion (€26.7 billion) Illinois Teachers' Retirement System (TRS) has expanded its emerging managers allocation to include budding private equity and real estate firms.

The $500 million programme, formerly restricted to the public market asset classes, will now target buyout, mezzanine, real estate and distressed debt groups that have less than $500 million in capital commitments and raised fewer than three institutional funds, according to a TRS spokeswoman.

The public pension, which manages the retirement assets of more than 344,000 teachers and school officials, has already committed $130 million to emerging managers focussed on public equity investments. TRS intends to commit up to 10 percent of the overall emerging managers programme to private equity and real estate firms.

TRS also approved a $38.9 million commitment to Avenue Capital Group’s first European-focussed distressed debt fund. The latest commitment represents the second Avenue Capital fund in which TRS has invested, following a $150 million commitment to Avenue Special Situations Fund V last year.

Avenue Europe Special Situations will focus on senior secured debt and unsecured debt in British, German, Irish and Benelux companies experiencing financial hardship, according to documents from the Pennsylvania State Employees Retirement System, which has authorized a commitment of up to €200 million to the fund.

TRS allocated roughly $2.2 billion towards private equity last year, equaling 5.2 percent of its total fund and producing a return of 30.9 percent.  Real estate enjoyed an 11 percent allocation and a 22.7 percent return.

Last month, TRS committed $150 million to TPG Partners VI, an $18 billion to $20 billion fund focusing on large and megacap buyouts.