Illinois Teachers’ Commits $420M To 3 Firms

Pension: Illinois Teachers’ Retirement System

Assets Managed: $39 billion (June 30, 2013)

PE Assets Managed: $4.4 billion (June 30, 2013)

PE Allocation / Target: 11% / 12% (June 30, 2013)

Chief Investment Officer: R. Stanley Rupnik

Overall, the pension has $4.4 billion in invested private equity capital, which amounts to 11 percent of its overall portfolio, as of June 30, 2013.  Illinois Teachers’ has a 12 percent private equity target.

By far the largest of the three commitments was $300 million to Apollo Investment Fund VIII LP, Apollo’s latest flagship fund. That fund has a $12 billion target, the largest of any fund currently raising money.  

Illinois committed to the previous Apollo flagship fund, the 2007-vintage Fund VII, which has performed very well. According to Dec. 31, 2013, data from the California Public Employees’ Retirement System, which invested $800 million in Fund VII, the pool has generated a net IRR of 22.2 percent and a net return multiple of 1.6x.

The second commitment from Illinois Teachers’ was for $100 million to New Mountain Partners IV LP, the latest fund from the New York-based mid-market firm. This fund has a $3 billion target, and will seek to invest in 16 to 20 North American-based companies over the fund’s lifetime, according to a report from the Pennsylvania Public School Employees’ Retirement System, which is also a New Mountain investor.

The fund’s predecessor, the 2007-vintage Fund III, has performed moderately well. According to Dec. 31, 2012, return data from CalPERS, which committed $400 million to the fund, Fund III has delivered a net IRR of 9.2 percent with a 1.2x return multiple.

The final pledge, which was made from the Illinois pension’s emerging manager program, was made to ICV Partners III LP, the latest fund from New York-based ICV Partners. The small to mid-market firm, which was founded in 1998 as “Inner City Ventures,” focuses on buying businesses that have $25 million to $250 million in revenue in the consumer goods, manufacturing, food and beverages and health care industries.

According to CalPERS, which committed $31.2 million to the previous fund, the 2005-vintage Fund II has performed moderately well.  The fund returned 9.8 percent with a 1.4x return multiple, according to data from Dec. 31, 2012.