Ill. TRS May Spend Up To $1.2B On PE in FY09

The $29 billion Teachers’ Retirement System of the State of Illinois is planning to start pledging in a big way to various private equity strategies over the next year to reach its goal of a 10 percent allocation to the asset class.

The tactical plan for the fiscal year, which began on July 1, calls for the pension fund to commit between $700 million and $1.2 billion over the next year to private equity firms. The sub-sector exposure ranges will remain unchanged at 60 percent to 80 percent for buyouts, 10 percent to 20 percent for venture capital and 5 percent to 20 percent for special situations, which includes distressed and mezzanine debt. As of June 30, the limited partner had 7.8 percent of its total portfolio in private equity.

In a prepared statement, the LP explained that private equity investments provide attractive returns and bolster the economy by providing capital to start-up companies and by allowing growth at established firms.

The LP’s new alternative investments officer, Zachary Doehla, who starts his position on August 17, will oversee the private equity portfolio.

The pension fund will also continue to seek real estate investments opportunistically, including emerging manager initiatives, to maintain a long-term asset allocation near the goal of 14 percent. Real estate assets represented about 13.8 percent of the total portfolio on June 30. The pension fund owns hotels, office buildings, industrial properties, multi-family housing and retail properties in the United States and abroad.

In other news, the board chose Hudepohl & Associates to conduct a search for candidates to serve as the pension fund’s executive director. The search will likely take six months. The executive director position has been vacant since April when Jon Bauman resigned. CIO Stan Rupnik will remain acting executive director until the position is filled.