Illinois Teachers Expands Allocation to Private Equity Asset Class

June 30, 2008

The Illinois Teachers’ Retirement System (TRS) provides another example of a pension fund increasing the amount of assets allocated to private equity. Other pension funds following this trend within the past six months include the California Public Employees Retirement System, Teachers Retirement System of Texas, Washington State Pension Fund, the San Francisco Employees Retirement System, and the Maine Public Employees Retirement System.

On May 23, 2008, TRS’s board of directors resolved to further develop its Emerging Manager Program. The $500 million Emerging Manager Program will expand its investments beyond the traditional public market asset classes to include investments in private equity, real estate, and absolute return investment management firms. “Expanding the program will help TRS better utilize young firms, including minority-and-female-owned investment managers, who can ultimately grow into increased mandates within the TRS portfolio,” said Stan Rupnik, TRS’s chief investment officer.

TRS is a multiple-employer public pension plan created in 1939 to provide retirement, disability, and survivorship benefits to its members, Illinois public school teachers and personnel. As of May 31, 2008, TRS’s net assets were estimated at $40.35 billion, and 5.9% of its assets were allocated to private equity investments. TRS’s Emerging Manager Program affords investment managers with smaller asset bases and developing track records the opportunity to invest on TRS’s behalf and to the main TRS fund. For information on applying to become a manager for the Emerging Manager Program, please see the TRS website.

The Private Equity Practice at McGuireWoods LLP is dedicated to keeping our clients advised of new legislative and business developments as they occur. If you have any questions regarding these issues, please feel free to contact your primary attorney at McGuireWoods LLP or you may contact the authors.