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Illinois Teachers to launch private equity co-investment consultant search, allocates $590M

by trusted insight posted 6years ago 766 views
Illinois Teachers’ Retirement System, Springfield, will initiate a search for three private equity co-investment consultants in early July according to Pensions & Investments. 

At a meeting Thursday, the board of trustees of the $50 billion pension fund approved the search for up to three companies to advise TRS on co-investments and to provide access to deal flow.

The five-year contracts of the three existing co-investment consultants — LP Capital Advisors, Stout Risius Ross and TorreyCove Capital Partners — expire in November. Jerry Quandt, investment officer for private equity, said the three firms can rebid for the new five-year contracts.

The RFP will be posted on TRS’ website after July 4, with a hiring decision expected at the board’s Oct. 28-30 meeting.

In other news, trustees approved or ratified a total of $590 million in new investments and commitments.

In hedge funds, trustees accepted the recommendation of Kenneth Musick, investment officer, to invest $150 million in managed futures fund ISAM Systematic, and $100 million in PDT Mosaic Fund, a quantitatively managed equity market neutral hedge fund managed by PDT Partners.

In the real-return portfolio, the pension fund committed $150 million to West Street Infrastructure Partners III, managed by Goldman Sachs Asset Management.

Trustees committed $150 million to Union Grove Venture Partners, a venture capital fund-of-funds-manager that spun out of Morgan Creek Capital Management last year.

Kenyatta K. Matheny, senior investment officer-alternatives and emerging managers, told trustees TRS’ $50 million commitment to Union Grove Partners Venture Access Fund II is contingent on the company raising at least $25 million from other investors for the fund.

The $100 million balance of the commitment is to a separate account, managed by Union Grove, over which TRS investment staff will retain investment discretion. Mr. Matheny stressed TRS was able to negotiate a no-fee, no-carry arrangement for the separate account.

The separate account will allow TRS to make larger investments in underlying venture capital funds than is possible in the fund-of-funds vehicle. When prudent, TRS may upgrade some of the underlying venture capital managers to separate account status, Mr. Matheny said.

TRS committed $85 million to Union Grove Partners Venture Access I and $15 million to Union Grove Partners Direct Venture Fund in 2014.

Trustees also ratified a $30 million commitment to a co-investment managed by existing private equity manager Parthenon Capital Partners. TRS previously committed $30 million to Parthenon Investors IV.

The board also approved an additional investment of $10 million to Maranon Capital’s existing fixed-income allocation, which totaled $28 million as of April 30.

Funding for the new investments and commitments will come from cash, rebalancing and passive accounts.

Also, T. Rowe Price Group was terminated from management of a $348 million enhanced large-cap domestic equity core strategy because of performance concerns. Bill Thomas, investment officer for U.S. equity, said the strategy had already been reduced by about $500 million since 2013.

Bill Benintende, a T. Rowe Price spokesman, declined to comment.

T. Rowe Price continues to manage $712 million for TRS in an active large-cap domestic equity growth strategy.

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