LPs

Chicago Teachers wants to boost exposure to minority and women-owned PE

-
Chicago Teachers’ Pension Fund, private equity, pension fund, diversity
The Chicago skyline, including Navy Pier, photographed from the lake. Photo courtesy Jackson A. Pierson/iStock/Getty Images
  • Chicago Teachers’ has 5 pct target for PE
  • $10.8 bln pension to allocate up to $40 mln under new mandate
  • More than 40 pct of assets managed by firms owned by minorities, women, persons with disabilities

Chicago Teachers’ Pension Fund has launched two new searches for minority-owned and women-owned investment firms, looking to allocate $40 million to private equity managers and $25 million to infrastructure.

The $10.8 billion pension fund has a 5 percent target to PE, with an actual allocation of 2.8 percent as of July 2018.

The pension fund is looking for investment managers that have $300 million in AUM and are certified as minority-owned businesses, women-owned businesses or businesses owned by a person with a disability, as defined by Illinois law.

The $300 million AUM number is a soft target and firms with less than that may be considered, according to the request for proposals.

The pension fund may allocate up to $40 million to PE managers and may select one or more managers to share the allocation, according to the RFP.

Chicago Teachers’ infrastructure target is 2 percent and it is looking to allocate $25 million to one or more managers. The pension fund prefers infrastructure-investment managers with at least $500 million in AUM.

Responses are due Feb. 1 for the PE RFP and Feb. 25 for the infrastructure RFP. Chicago Teachers’ consultant, Callan Associates, is assisting in the search.

Illinois law requires the state’s pension funds to attempt to allocate 20 percent of their assets to businesses owned by women, minorities or people with disabilities.

Chicago Teachers’ has allocated $4.5 billion, or 42 percent of total fund assets, to such firms, its January 2019 report on diversity shows.

The pension recently conducted a separate search for Africa-focused PE opportunities and has not yet reported making any commitments as a result of that search.

It had narrowed the search to four finalists as of November and had planned to allocate an estimated $25 million to the winner.

Action Item: View the RFPs on the Chicago Teachers’ Pension Fund website: https://bit.ly/2soLczC