The Teachers’ Retirement System of the State of Illinois approved $65 million in new commitments, pledging to a buyout fund specializing in corporate carve-outs and to a technology-focused, woman-owned venture capital fund.
The bigger of the two was $50 million to Onex Partners III LP, earmarked for buyouts in aerospace, health care and industrial sectors. The commitment will be funded from cash and passive/enhanced index accounts. As of July, Onex Partners, a part of Onex Corp., which is listed on the Toronto Stock Exchange, had gathered more than $3.3 billion from 50 backers toward its $4.5 billion goal for the fund.
Onex Corp. specializes in carving out parts of U.S. multinational corporations and turning them into stand-alone companies. Although it’s based in Canada, most of the companies it buys are based in the United States. Onex Partners LP, vintage 2004, generated an IRR of 52.48 percent since inception as of March 31, 2008, according to backer California State Teachers’ Retirement System.
The pension fund also pledged $15 million to StarVest Partners II, a technology-focused, woman-owned venture capital fund, as part of the limited partner’s emerging manager program. This is the first private equity manager to be included in the $500 million program since it was expanded in June to allow private market investments. The program aims to provide oversight and support to help promising firms grow into larger mandates. StarVest Partners recently led an acquisition of IRON Solutions LLC, a data provider for the farm and construction equipment industry.
Private equity has been one of the best-performing asset classes for the pension fund, providing 20 percent returns over the three-, five- and 10-year reporting periods. The LP, which has $38.7 billion in assets under management, had an actual private equity allocation of 5.8 percent at the end of March and could reach its goal of 8 percent next year. Within the private equity portfolio, the breakdown of holdings is 60 percent to 80 percent toward buyouts; venture capital, 10 percent to 25 percent; and special situations, 5 percent to 20 percent.