Pension LPs explain how new managers can get funded. (Hint: Have patience.)

  • Why is this important: Pension LPs say that new managers must be patient — but patience can pay

So you’re an emerging manager who wants to work with Teachers’ Retirement System of Illinois?

You better have patience.

That’s according to Richard Ingram, executive director of the $51.4 billion system, who spoke at Buyouts Insider’s PartnerConnect Midwest conference in Chicago on June 26.

The retirement system, which has an about $6.3 billion private equity portfolio, has a $750 million pool of capital to invest in emerging managers across asset classes, Ingram said.

The point of the program is to “create relationships that will mature and grow to size where they’ll move into the main portfolio and become long-term relationships with us,” regardless of allocation scheme, Ingram said. “It’s a proving ground for new relationships.”

About 85 percent of the emerging-manager program is dedicated to firms run by women or minorities, Ingram said.

That’s not necessarily on purpose, but more the nature of the emerging-manager community, he said. Illinois TRS has a separate diversity goal for its investment program, he said.

For those looking to work with the pension, it’s best to have patience. The system moves slowly and an actual financial commitment could take years, Ingram said.

But even absent a commitment, the system is willing to work with promising managers, he said.

“We’re looking for relationships that would be long-term. … [We] would begin with a $15 million, $25 million commitment, but we want that to grow into $600 million or even $1 billion commitment,” Ingram said. “That happens, but it doesn’t happen quickly.

“And if we don’t write you a check, that doesn’t mean we won’t invest the time to work with you, counsel you … to get you across the finish line with us.”

Angela Miller-May, chief investment officer of the $10.8 billion (as of late 2017) Chicago Teachers’ Pension Fund, said at the conference that the system is considering setting up an emerging-manager program similar to that of the Illinois system.

The Chicago system already invests about $4.5 billion with women, minority and disabled-led firms, she said.

Chicago Teachers’ has an open-door policy for new managers and even enables around eight to 10 new managers to come in and make presentations to the board, staff and consultants every first Friday of the month, she said.

“Be persistent. … We’re not going to be able to answer your email right away, or your calls. Be persistent but be understanding of our time,” Miller-May said.

She said managers should also fill out the Institutional Limited Partners Association due-diligence questionnaire, which is part of the system’s procurement process.

Action Item: Read more about the Illinois program here: