Searches and Hires

Illinois Municipal picks Piedmont for $1 billion index fund, commits another $260 million

Illinois Municipal Retirement Fund, Oak Brook, on Friday hired minority-owned manager Piedmont Investment Advisors to manage $1 billion in a Russell 1000 Growth index separate account, subject to due diligence.

Funding will come from reducing a $3.57 billion U.S. market capitalization equity index portfolio managed by Northern Trust Asset Management.

Dhvani Shah, chief investment officer of the $41 billion pension fund, said IMRF wanted to bring its overall investments through minority- and/or women-owned managers back to its goal of 20% of plan assets. Minority manager Holland Capital Management, which ran $967 million in active U.S. large-cap growth equities for Illinois Municipal, was terminated in August after the firm notified the plan that it was closing. Those assets were distributed to other active equity managers.

A passive minority manager was sought to maintain both IMRF's 59%/41% active-passive split in its $17.7 billion U.S. equity portfolio and its 20% minority-/women-owned asset management goal, according to a report to the board's investment committee.

Piedmont, which already manages $752 million in active core fixed income for the plan, will be the pension fund's first minority-owned passive equity manager.

An RFP was issued in October.

Separately, Illinois Municipal's board approved a total of up to $260 million in commitments to six alternatives funds run by four managers, subject to successful contract negotiations.

IMRF committed:

  • up to a combined 100 million ($140 million) to midmarket U.K. buyout funds Inflexion Buyout Fund V and Inflexion Partnership Capital II, both managed by Inflexion Private Equity Partners;
  • a total of up to $85 million to Lightspeed Venture Partners XII and Lightspeed Venture Partners Select III, venture capital funds that invest in early- and late-stage disruptive enterprise and consumer technology;
  • up to $20 million to Versant Voyageurs I, an early-stage health-care venture capital fund run by Versant Venture Management that targets Canadian firms; and
  • up to $15 million to AUA Private Equity Fund II, a lower-midmarket private equity fund managed by minority manager AUA Private Equity Partners focusing on the consumer product and services sector.

The pension fund expects to commit up to 56 million to Inflexion Buyout Fund V and the remainder will go to the second partnership fund; a minimum of 20% of the Lightspeed commitment will go to the firm's third select fund.

The four managers running the six funds already manage assets for IMRF in other funds, said Ms. Shah. IMRF has invested a combined 87 million in four Inflexion funds, a total of $126 million in nine Lightspeed funds, $30 million combined in two Versant funds and $5 million in an AUA fund.

Illinois Municipal has an 8% target allocation to alternatives; as of Dec. 31, 3.5% of total assets were invested in alternatives.