Illinois Teachers boost PE by over $700m, redeem $1bn-plus from HFs

The $50.6 billion Teachers’ Retirement System of Illinois in Springfield made key hires across multiple alternative investment portfolios with a total of $755 million in new commitments being made in the $6.5 billion private equity program. Meanwhile, hedge funds in the portfolio logged a total of $1 billion in partial and full redemptions from the state pension plan. Yet another $500 million was put to work with new managers in the diversifying strategies portfolio. The system also reported $400 million in new commitments put to work in the system’s real asset portfolio and another $100 million to Beach Point Capital within the TRS’ global income portfolio. Officials said they have slowly started to recapture funds lost to the economic devastation of the coronavirus pandemic. In the first quarter, the systems lost $5.6 billion in assets due to the market downturn. Staffers said that the defensive strategy implemented at TRS helped prevent greater losses and protected assets. Specifically, officials point to the firm’s diversified portfolio, which includes a 15.7% allocation to real estate, 13.4% to private equity opportunities and 11.6% in investments designed specifically to help lessen the effects of an economic downturn -- diversifying strategies. At trustees June meeting, six allocations were made to the private equity program to existing managers, including a $200 million commitment that was made to Stockholm-based EQT Partners. Another $200 million went to California-based firm Silver Lake Partners, which already manages $350 million of TRS assets. According to the June meeting report, a total of $150 million went to New Mountain Capital Partners as Pamlico Capital was tapped for an additional $50 million and Vista Equity Partners saw an add-on commitment of $75 million. Illinois Teachers also hired three firms to provide consulting services on private equity co-investment opportunities. They are: Stout Risius Ross; Aksia TorreyCove; and Meketa Investment Group. The firms form a pool of advisors the pension can call upon which gives the pension fund flexibility in the marketplace. The contracts will expire in no more than five years. As over $1 billion in redemptions was logged within the $5.6 billion diversifying strategies portfolio, four firms were selected to manage capital. Only one was a new manager for the retirement fund -- Capstone Investment Advisors in New York. The fund will manage $200 million. Brevan Howard Asset Management received a $150 million investment, while another $100 million was sent to Aspect Capital. Last, but not least, Graham Capital in Connecticut is set to receive another $100 million for TRS. Redemptions however outpaced the new capital allocations among hedge fund managers. A final redemption was made from Bridgewater Associates’ risk parity strategy totaling $255 million. A $200 million full redemption from Kepos Capital’s alternative risk premia strategy was also logged. Two other full redemptions were made with Carlson Capital Management giving back $161 million and GAM $167 million. Partial redemptions continue in the diversifying strategies portfolio too with AQR Capital Management ($100 million); The Man Group ($100 million) and Grosvenor Capital Management ($75 million) all returning assets. The largest alternatives program, the $8 billion real assets portfolio, had a busy month too. A $250 million commitment was made to Brookfield Asset Management in New York, which is a new manager for TRS. A second allocation totaling $200 million was made to Strategic Partners Fund Solutions Advisors, which is owned by parent company Blackstone, which already handles $620 million in TRS assets.

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