Illinois Municipal builds separate accounts with Goldman, HarbourVest

  • Assets under management: $40.87 bln
  • Private allocation to PE: 3.7 pct
  • Actual allocation to PE: 7 pct
  • What’s new: The pension fund added two new fund-of-one accounts to expand PE exposure

Illinois Municipal Retirement Fund partnered with Goldman Sachs and HarbourVest on fund-of-one accounts to expand its exposure to private equity.

The pension fund committed $100 million to Goldman and $200 million to HarbourVest in evergreen separate accounts, according to a press release. It’s not clear what strategies each fund focuses on.

Illinois Municipal has two existing separate accounts with Abbott Capital and Pantheon. Abbott had $315.7 million and Pantheon had $225.9 million in assets under management for Illinois Municipal as of March 31, 2018, pension documents show.

Along with its separate accounts, Illinois Municipal staff also makes commitments directly into funds. The system said this week it re-upped $100 million to Vista Equity Partners’ seventh fund. Vista manages $340 million across six funds for Illinois Municipal.

The pension fund also re-upped $50 million to Valor Equity Partners’ M33 II fund; Valor manages $80 million across two investment vehicles.

Earlier in the year, the pension fund trimmed the target allocation for alternative assets to 7 percent from 8 percent after an asset allocation review. Actual allocation is 3.7 percent or $1.5 billion in the $40.9 billion fund.

“If you factor in commitments that have not yet been funded, our actual allocation stands at 6.6 percent,” said Dhvani Shah, chief investment officer of Illinois Municipal, in an email.

Illinois Municipal’s alternatives portfolio includes private equity, agriculture and timberland. Based on net asset value, private equity accounts for more than 80 percent of the alternatives portfolio, Shah said.

The mandate for investment managers is broad. They can invest in buyout, growth equity, venture capital, mezzanine and special situations. They can also opportunistically invest in secondary funds and co-investments, Shah said.

Illinois Municipal’s private equity portfolio returned 14.99 percent for one year, 10.99 percent for three years, and 12.29 percent over five years for the period ended 31 March 2018.

The $40.87 billion fund returned 11.34 percent for the 12-month period ended 31 March 2018.