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Chicago Teachers’ pension weighs Africa-focused PE options

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private equity, Africa, Chicago Teachers' Pension Fund, pension fund
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  • $10.7 bln fund mulls $20 mln-$25 mln to Africa-focused PE
  • Four finalists; CTPF to decide next month
  • System exposed to Africa private markets via fund-of-funds

Chicago Teachers’ Pension Fund narrowed its search for Africa-focused private equity opportunities, selecting four finalists for a mandate worth an estimated $25 million.

The $10.7 billion pension fund launched a search for Africa-focused PE opportunities in July.

The retirement system said it was open to buyouts, growth equity, or special situations, and it was interested in either pan-African or country-specific investment strategies.

The retirement plan had invited four finalists to its November meeting but deferred a decision in light of recent board elections, CIO Angela Miller-May said. Chicago Teachers’ installed five new trustees on its board after elections in November.

Finalists under consideration are Advanced Finance and Investment Group, Development Partners International, Pantheon Ventures and Sango Capital Management.

Chicago Teachers’ already invests with Pantheon, but the other three would be new relationships.

Chicago Teachers’ said it wanted to allocate $20 million to $25 million and was open to choosing a single manager or splitting the mandate between two parties.

The retirement fund has been invested in Africa through fund-of-funds managers for more than 20 years, but the RFP marks Chicago Teachers’ first direct primary allocation, Miller-May said.

Pursuing African PE is part of the pension funds’ desire to think globally in its long-term investment decisions.

Africa and Asia will likely offer higher growth potential than Western Europe and the U.S., and the system wants to take advantage of PE managers’ expertise in that space, Miller-May said.

“We believe at this time there is a great field of general partners actively raising funds focused on Africa,” Miller-May said in a previous interview.

“We are not making a call on whether Africa is undervalued or cheap. … What we focus on more is those periods of time when there is a field of qualified general partners raising funds.”

Chicago Teachers’ has a 5 percent allocation target to private equity. Its actual allocation was 2.8 percent as of July 2018.

The pension funds typically use RFPs when hiring new private equity managers, based on a regulatory requirement to run a transparent and competitive procurement process.

Action Item: View CTPF’s responses to RFP questions: https://bit.ly/2OVwiK7