In September 2006, the pension fund’s board of directors voted to double its target allocation to the asset class from 5 percent to 10 percent. With $5.5 billion under management, the bump means the pension fund now has about $550 million to devote to the private equity, up from $275 million.
With twice as much capital to divide across the private equity landscape, the board decided it made sense to bring in another point of view, said Chief Investment Officer Robert Newland. Hamilton Lane’s involvement brings the total number of gatekeepers up to three for the Indianapolis, Ind.-based pension fund. Portfolio Advisors serves as its primary adviser and will continue in that role. And Credit Suisse’s Customized Fund Investments Group oversees $50 million earmarked for investment with Indiana-based private equity funds.
“Our board just felt that while Portfolio Advisors is doing an excellent job—and we have no complaints at all—they felt that maybe Hamilton Lane could diversify things a little bit and add some funds,” Newland said.
At the moment, the pension fund has made commitments of roughly $500 million to private equity funds, with actual investments hovering between $200 million and $215 million, according to Newland. Both Portfolio Advisors and Hamilton Lane have full discretion over the investment of assets. It is unclear how much capital each firm oversees for the pension fund.
While Indiana Teachers’ is looking to increase its exposure to the asset class, the board favors the traditional arenas of buyout funds, mezzanine funds and venture capital vehicles. The pension fund has no plans to broaden its investments into sectors such as infrastructure.
The LP has made commitments to such buyout firms as