Gearing up to fulfill its own targets in private equity investment, the Board of Trustees of the Teachers’ Retirement System of the State of Illinois last month adopted a plan that will commit about $600 million to private equity.
The “private equity tactical plan” covers investments to be made in FY2006. The total amount invested will “depend on market conditions” the board said. Of the $600 million private equity allocation, 50% of it, or $300 million, is earmarked for buyouts and $225 million is reserved for venture capital. Special situations and subordinated debt are allocated $50 million and $25 million respectively.
The Board of Trustees credits the decision to invest more in private equity to its increased mandate of having 4% of its assets allocated into private equity. The board affirmed its target allocations in its meeting, following a study by Callan Associates.
The Board of Trustees also voted to commit to three private equity funds:
*The Board committed $45 million to Chicago-based Banc Funds’ Banc Fund VII. The fund will make buyout investments in U.S. sub-regional financial services firms. Banc Funds’ last fund, Banc Fund VI, closed in 2002 with $320 million.
*The Board also committed $25 million to Wind Point Partners VI, a buyout fund managed by Southfield, Mich.-based buyout firm Wind Point Partners. The fund will target middle market companies. The firm closed Wind Point Partners V in 2001 with $476 million.
*It also committed $20 million to early-stage venture fund Granite Ventures’ second fund, Granite Ventures II. The first Granite Ventures fund closed in 2001 with $150 million.
Other private equity firms that the system has been a limited partner in include buyout firms Kohlberg Kravis Roberts & Co., Sandler Capital Management and Veronis Suhler & Associates and Frontenac Co.