Ill Teachers Adds Emerging Manager; Ups Pledge To Mega-Fund

The Teachers’ Retirement System of the State of Illinois recently added to the list of private equity firms in its emerging managers program with a pledge to a mezzanine fund. It also gave an additional slug to a name-brand mega-fund.

In mid-June, the plan sponsor committed up to $25 million to Maranon Mezzanine Fund LP, a vehicle of private equity firm Maranon Capital, which has been admitted into the limited partner’s emerging managers program. It also approved an additional $100 million to Blackstone Capital Partners Fund VI, a mega-buyout fund that initially got a $50 million mandate from the LP last fall.

Chicago-based Maranon Capital provides senior debt, mezzanine debt and equity co-investment capital for leveraged buyouts, recapitalizations, refinancings, growth initiatives, acquisitions and ESOPs. It seeks $250 million for its fund. The Blackstone Group seeks $15 billion to $20 billion for Fund VI, and will begin investing from that vehicle in late 2009 or early 2010.

Although the LP established its $500 million emerging managers program in 2005 to foster long-term relationships with developing investment firms, private equity firms were not admitted into the program until May 2008. The goal is to ultimately have 10 percent of the emerging manager program allocated to private equity, said spokesperson Eva Goltermann. The only other private equity firms in the program are StarVest Partners, a technology-focused, woman-owned venture capital shop that got a $15 million pledge for StarVest Partners II in December, and Clearlake Capital Partners, which takes control positions in small and mid-size North American companies and received a $25 million slug for Clearlake Capital Partners II in May.

In other news, a committee will meet on July 31 to interview executive search firms, one of which will be hired to identify candidates for the executive director position that’s been vacant since April when Jon Bauman resigned. A finalist will likely be selected in August. Chief Investment Officer Stan Rupnik will remain acting executive director until the position is filled. The LP is still interviewing candidates to replace Lamar Villere, formerly the senior alternative investments officer, who left earlier this year to oversee the Tennessee Consolidated Retirement System’s private equity program. A search also continues for a general investment consultant.

Teachers’ Retirement System of the State of Illinois had assets of $27.2 billion as of March 31, 2009. In late May, the state upped its target allocation to private equity to 10 percent from 8 percent. It had an actual private equity allocation of 9 percent at the end of March.