Illinois Teachers Plans Private Equity Expansion

Jun 28 2011 | 5:31am ET

Illinois' teachers will be relying more heavily on private equity to finance their futures. The state's Teachers' Retirement System Board of Trustees plans to increase its p.e. investments by up to $1.4 billion a year for the next five years, it said Friday.

The board approved a new 12-month tactical investment plan, as well as two new commitments, one increased commitment and one request for proposals. For next year, the $37.3 billion pension plans to boost its private equity exposure to 11% from 9.1%, with further increases of between $900 million and $1.4 billion in each of the next five years.

"The TRS private equity portfolio has delivered attractive performance since inception," Richard Ingram, executive director, said. "The 2012 tactical plan is designed to deliver the greatest risk-adjusted investment returns on behalf of our 372,000 members."

TRS' p.e. portfolio has returned 14.5% over the first three quarters of its fiscal year 2011.

The board also approved a $108 million investment in Sweden's EQT Funds Management and a $75 million investment in Black River Asset Management at its June meeting. An additional $70 million to $75 million was allocated to New Century Advisors, which already manages $200 million for TRS.

The trustees additionally approved a request for proposals for a real-estate insurance brokerage private equity investment. That $3.5 billion portfolio is currently managed by Tave Risk Management, which has been invited to resubmit a bid for it.

TRS' new private equity plan calls for further co-investments by the pension, expanding a program that was launched last year.

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