Illinois Teachers’ retains PE amid asset sell-off

The $33.7bn pension expects to ‘remain an active investor in private equity’ and will be able to meet capital calls.

The Illinois Teachers’ Retirement System has engaged in a massive asset sell-off to keep meeting its obligations to members, but so far the pension has preserved its private equity holdings.

The $33 billion pension plans to sell off $3 billion in investments to pay benefits, according to a spokesperson. Illinois Teachers’ has sold $384 million from fixed income investments, $100 million from domestic equity and $6 million from real return.

But so far the sales have not impacted the pension’s private equity programme, the spokesperson said.

“All asset sales have come from rebalancing of public equity, fixed income and real return accounts,” the spokesperson said. “The system remains an active investor in the private equity and real estate asset classes and retains the liquidity to continue to meet all of its capital call commitments.”

The pension has allocated $700 million to $1.1 billion for private equity commitments in fiscal 2011, as well as overhauling its private equity programme, expanding into significant co-investments, secondaries and international investment capabilities.

Illinois Teachers’ is reviewing its “older” private equity investments “with an eye toward selling some of these assets”, the pension said in a statement. The pension’s private equity programme is valued at about $2.7 billion.

Illinois Teachers’ is one of several pensions in Illinois that are selling off assets to meet obligations to members as state contributions have fallen, according to an article in Pensions & Investments.

The Illinois State Board of Investments, which manages $9.9 billion in assets, wants to sell off close to $1 billion over the next year to help meet obligations, but not in private equity.

“Our hope and intent is to restrict our liquidations to liquid assets such as stocks and bonds,” William Atwood, executive director of the board, told PEO.

The investment board manages a $546 million private equity portfolio, and is slightly over-weighted to the asset class, with an actual allocation of 5.48 percent and a target of 5 percent as of 31 July.