The Teachers Retirement System of Illinois last month created a new allocation that will steer as much as $100 million per year to emerging managers of buyout, mezzanine and venture capital funds.
The new allocation expands TRS Illinois’s emerging managers program, which previously directed $125 million annually to emerging firms specializing in public equity investing. Under the newly expanded program, TRS Illinois expects to commit $10 million to $25 million per fund, resulting in three to five new relationships per year across buyouts, mezzanine and venture capital, said Eva Goltermann, public information officer for the $41 billion pension fund based in Springfield, Ill.
The limited partner decided to expand the program beyond stocks because the investment team believed it was missing out on chances to get in on the ground floor with new alternative-asset management shops. The new allocation should allow TRS Illinois to back spin-outs from proven firms and pay extra attention to firms owned by minorities and women, Goltermann said.
“The whole point is we’re looking to find the next generation of top-tier managers,” she said. TRS Illinois typically commits $75 million to $100 million per LBO limited partnership, a commitment range that’s well in excess of what most emerging fund managers could absorb from a single backer.
TRS Illinois staff will supervise the selection of fund commitments. The pension fund will also receive some assistance from PCG Asset Management, its adviser for alternative assets.—J.H.