Firms & Funds

Illinois Municipal deepens relationships with Abry and Versant

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private equity, Illinois Municipal Retirement Fund, private equity, pension fund, Abry Partners, Versant Ventures
The Chicago Cubs' Kerry Wood pitches in relief during the 6th inning of Game 2 of their MLB National League Division Series playoff baseball game against the Arizona Diamondbacks in Phoenix, October 4, 2007. REUTERS/Jeff Topping
  • Assets under management: $41.3 bln
  • Actual allocation to alternatives: 4 pct
  • Target allocation to alternatives: 7 pct
  • Actual PE allocation: $1.34 bln or 3.2 pct of total portfolio
  • Whom to contact: Dhvani Shah, chief investment officer (DShah@imrf.org)
  • Why this is important: The pension fund continues to re-up to existing managers

Illinois Municipal Retirement Fund at its Aug. 24 board meeting disclosed re-ups of $135 million across three funds from Abry Partners and Versant Ventures.

The $41.3 billion pension system committed $75 million to Abry’s fourth advanced-securities fund, targeting $1.5 billion.

Abry invests in lower-middle-market businesses in media, communications, information and business sectors, and it has several equity and debt funds.

Its advanced-securities funds focus on first- and second-lien bank debt raised to support leveraged buyouts.

Its third debt fund closed at $1.5 billion in 2014.

Abry’s flagship funds invest in transactions between $40 million and $175 million while its heritage funds invest in transactions under $50 million, a Los Angeles City Employees’ Retirement System presentation shows.

Illinois Municipal has invested in 12 investment vehicles with Abry and has fund exposure of $143.3 million, pension documents said.

Andrew Banks and Royce Yudkoff co-founded Abry in 1989. Both previously worked at Bain & Co and shared responsibility for the consulting firm’s media practice.

Illinois Municipal also re-upped $40 million to Versant’s seventh flagship fund and $20 million to Versant’s first medical-technology fund.

How much the two Versant funds are targeting is unclear. Versant did not respond to emails for this article.

But the healthcare investment firm’s sixth fund closed at its hard cap of $400 million in 2017 and expected to invest in 20 to 25 biotech companies in the U.S., Canada and Europe, Buyouts reported.

Illinois Municipal has invested $50 million in three investment vehicles from Versant.

Focused on re-ups

In the past two years, Illinois Municipal has focused only on re-ups.

It re-upped 100 million pounds ($129 million) to Inflexion Private Equity Partners, $105 million to Lightspeed Venture Partners, $20 million to another Versant fund, $100 million to Vista Equity Partners, $25 million to True North Managers and $50 million to Valor Equity Partners in 2018.

To expand its exposure to private equity, however, Illinois Municipal committed $300 million to two fund-of-one accounts with HarbourVest Partners and Goldman Sachs in May, Buyouts reported.

The pension system has existing separate accounts with Abbott Capital, Pantheon and Muller & Monroe as well.

Illinois Municipal’s alternatives portfolio includes PE, absolute returns, agriculture, timberland and unlisted infrastructure funds, pension documents said.

Private equity accounted for more than $1.3 billion, or 80 percent, of the alternatives portfolio as of June 30, 2018, pension documents show.

Private equity returned 14.87 percent over one year, 11.64 percent over 3 years, 12.51 percent over 5 years and 7.96 percent over 10 years for the period ended June 30, 2018.

The PE portfolio has returned 12.91 percent since inception.

Action Item: Read more on Illinois Municipal’s PE investments here https://bit.ly/2of92M0