The Illinois Teachers' Retirement System, Springfield, on June 25 rehired PCG Asset Management as the $32.1 billion fund's private equity consultant. The consultant's current contract expires June 30.
PCG will assist the system's staff in implementing the 2011 private equity tactical plan, which was also approved on June 25 by trustees. Under the new plan, TRS will invest between $700 million and $1.1 billion combined in between nine and 16 private equity funds or co-investment deals, said. Zachary “Zak” Doehla, alternative investment officer. TRS' private equity commitments totaled $6.6 billion as of Dec. 31, Mr. Doehla said.
Mr. Doehla told trustees at their meeting that he and PCG consultants are preparing recommendations for board approval that will significantly expand the system's non-U.S. private equity investments, particularly in Asia, with a focus on China, and in Europe. With regard to Asian private equity opportunities, Mr. Doehla told trustees “overwhelmingly, this is where the growth will be.”
Fund staff and PCG are also developing criteria and processes that will permit TRS to invest in private equity opportunities available on secondary markets as well as to sell interests in private equity funds.
Mr. Doehla said the system's nascent co-investment program will start in earnest once TRS has hired an adviser to provide independent third-party fiduciary evaluations of potential direct co-investment opportunities. An RFP will be posted shortly on the system's website, said Stan Rupnik, chief investment officer and acting executive director. An exact timeline for posting of the RFP and a deadline for applications have not been set, but Mr. Rupnik said the board expects to make a selection at its August or October meeting.
Private equity commitments approved at the June 25 board meeting were a $75 million commitment to EIF United States Power Fund IV LP and a $50 million increase in the commitment to Blackstone/GSO Capital Solutions Fund LP for a total of $150 million.
In other TRS news, SSgA was terminated for performance and organizational concerns for a $335 million international enhanced index account. SSgA “just is not producing alpha,” Kent Custer, senior investment officer, told trustees. SSgA spokeswoman Arlene Roberts didn't immediately comment.
TRS trustees clarified their May 20 decision to permit investment staff to select public equity investment managers — except for emerging and minority-owned firms — in a pilot program. According to minutes from the May meeting, “currently, a majority of the investment committee's time is spent interviewing manager candidates. Restructuring the current process will allow more time for strategic portfolio decisions, education and other topics.”
Staff members were granted discretion to hire and fund an active domestic core equity manager and an active core international equity manager over the summer. The searches were authorized last October, and the size of each mandate and the timing of the searches were not disclosed. The manager hires are subject to board review and ratification.