Washington State Investment Board, Olympia, placed Pacific Rim equity manager Chancellor LGT on probation due to concerns over the transition of ownership to AMVESCAP, said Chris Ailman, CIO. The firm's $300 million portfolio has had strong performance, but the board will watch for changes in the investment process or personnel, Mr. Ailman said.
Separately, the $45 billion fund committed $75 million to TSG Capital III and $21 million to Olympus Growth Fund III, both private equity funds. Brinson Partners assisted. The board also voted to allow staff to allocate up to an additional $50 million to Mezzanine Capital Property Investors, an existing private REIT investment. PCA assisted.
Funding for the commitments will come from rebalancing.
International Paper Co., Purchase, N.Y., will begin searching for high-yield and international bond managers - both new asset classes - for its pension fund after it completes its search for international stock managers sometime next month, said Robert Hunkeler, vice president and director of investments. The $3.7 billion pension fund will probably hire two managers for each of the asset classes, and will allocate 4% of total assets to the classes, he said.
Pension funds that owned 10 Los Angeles and San Fernando Valley office buildings damaged in the 1994 Northridge, Calif., earthquake received a $5.7 million out-of-court settlement from five insurance companies, said Steven Fox, attorney for the plaintiffs.
The insurers - Firemen's Fund Insurance, Navigators Insurance, Westchester Surplue Lines Insurance, Homestead Insurance and RLI Insurance - originally withheld payment. They claimed policy language required each damaged building to pay its own deductible before insurance payments would be made and that tenants left because of damage caused by the tenants, not the earthquake.
Trust Company of the West and Westmark Realty Advisors were the trustee and manager, respectively, to the pension funds, which invested via separate accounts and commingled funds.
Among the investors were the pension funds of Pacific Telesis Group, U S West, McDonnell Douglas Corp., United Mine Workers of America, the Presbyterian Church, Pacific Gas & Electric Co., Ford Motor Co., the state of Minnesota, Los Angeles County and the Illinois Municipal Retirement Fund.
Firefighters Pension and Relief Fund for the City of New Orleans may invest between $5 million and $10 million in hedge funds.
The board is expected to decide in the summer whether to move forward with a search in the new area. Trustees want to decide which type of fund would be best suited to the $175 million pension fund before initiating a formal search, said Richard Hampton, Jr., fund administrator.
It is likely a fund-of-funds approach would be used, he added. Smith Barney is assisting.