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LP corner, week of Dec. 15, 2008

Illinois Teachers pledges $65M to VC, buyout funds

The Illinois Teachers’ Retirement System recently approved $65 million in new commitments, pledging to a buyout fund and a venture capital fund.

The LP committed $50 million to Onex Partners III, which is earmarked for buyouts in aerospace, health care and industrial sectors. As of July, Onex Partners, a part of publicly traded Onex Corp., had raised more than $3.3 billion from 50 backers toward its $4.5 billion goal.

Onex 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. Its vintage 2004 fund generated a return of about 52.5% as of March 31, according to backer California State Teachers’ Retirement System.

The state pension fund also pledged $15 million to StarVest Partners’ second fund, 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. —Nancy Gordon

Health Care Foundation plans hiatus

The Health Care Foundation of Greater Kansas City recently pledged $30 million to a fund of funds manager and an infrastructure investor. But the financial crisis has apparently cooled the foundation’s interest in private equity. It now expects to take a hiatus of up to a year from additional commitments to the asset class.

The recent pledges included a $20 million commitment to HarbourVest Partners, of which $6 million will go to fund of funds HarbourVest International Private Equity Partners VI; $4 million to secondaries fund Dover Street VII; and $10 million to fund of funds HarbourVest Partners IX Venture Fund.

The limited partner also earmarked $10 million for Macquarie Infrastructure Partners II, earmarked for infrastructure investments in the United States and Canada.

But that should do it for the LP. Orval Fisher, CFO, said: “Given the market turmoil over the last couple of months, I don’t think we will be making any more private equity commitments in the next six to 12 months.”

As of July, the foundation had a 6.6% actual allocation to private equity, well below a 10% target, and $80.6 million had been committed to private equity, of which $27.4 million had been called.

The Health Care Foundation of Greater Kansas City was established in 2003 with the proceeds from the sale of nonprofit hospital operator Health Midwest to HCA Inc. —Nancy Gordon

Fort Worth pledges $30M yearly to PE

The $1.6 billion Fort Worth Employees’ Retirement Fund plans to commit about $30 million a year to private equity funds, building on $64 million in commitments to date, says Ruth Ryerson, executive director and CIO.

The city currently has relationships with Aldus Equity, an advisor that manages $12 million for the limited partner; and Credit Suisse, which oversees $19 million. The LP has also made commitments to Montagu Newhall Associates, a venture capital fund of funds manager; and Ashmore Investment Management’s Global Special Situations Fund 3, which is concentrated on distressed emerging market companies in China, India, Russia and Brazil.

Fort Worth has an allocation range to private equity of 2% to 10.5 percent. The LP’s long-term target is 7.5%, but it has also set a 4% short-term target that it expects to achieve within the next year or two. As of Sept. 30, the investor had an actual private equity allocation of about 3 percent. —Nancy Gordon

CalSTRS taps independent evaluators for PE program

The California State Teachers’ Retirement System has chosen four firms to serve as independent fiduciaries for its nearly $1 billion Private Equity Proactive Portfolio program, earmarked for fund managers operating in emerging markets in California and elsewhere nationwide.

The firms tapped as independent fiduciaries are Credit Suisse Customized Fund Investment Group; KPC Consulting Group; Meketa Investment Group; and PCG Asset Management, according to CalSTRS spokesperson Ricardo Duran.

The program has made total commitments of $985 million as of Oct. 31. Although the program does not have a set number of commitments or a designated commitment size, past individual pledges in the program have ranged from $20 million to $150 million. —Nancy Gordon