Illinois Teachers Pension Plans to Boost PE Investing

(Reuters) – An Illinois-based pension fund with assets of $37 billion is planning to significantly increase its investment in private equity by pumping up to $7 billion in the asset class over the next five years.

Private equity firms have struggled to raise new funds since the credit crisis but several are coming back to the market to raise funds this year. Increased optimism from investors is good news for such funds, which rely heavily on pension funds to raise cash.

The Teachers’ Retirement System Board of the State of Illinois said its board of trustees approved a new 12 month tactical investment plan for its $3.4 billion private equity portfolio.

It plans to commit new investment of $900 million to $1.4 billion in each of the next five years.

Currently, private equity investments total 9.1 percent of its assets. It expects to increase that to 11 percent in 2012.

It aims that the bulk of its private equity investments will be in corporate finance opportunities, while up to 20 percent will be in venture capital and up to 25 percent in ‘special situations’ such as distressed debt.