Michigan Municipal Employees' Retirement System, Lansing, acquired a 30% ownership stake in emerging manager Irving Magee Investment Management, confirmed Jeb Burns, the $6.4 billion system's chief investment officer.
The system and Irving Magee struck a five-year operating agreement that gives the pension fund an undisclosed revenue share of the money manager's profits, Jordan Irving, one of the firm's two managing directors, said in an interview.
Michigan Municipal is not paying a fixed sum for the equity stake in the manager, but instead will provide working capital for corporate purposes such as infrastructure and personnel expansion up to a set limit, which Mr. Irving declined to provide.
Mr. Burns confirmed the parameters of the deal.
Michigan Municipal first invested with Mr. Irving and Francis Magee, also a managing director of the new firm, in 2005 when the pair worked together at Delaware Investments. When Irving Magee Investment Management opened on Oct. 1, the system transferred $84 million from the Delaware mandate to the fledgling firm.
On April 25, Michigan Municipal contributed an additional $50 million, bringing the total portfolio to $160 million as of April 30.
Mr. Irving said the system is the firm's only client.
Mr. Burns said the stake is separate from the investment management arrangement the system has with Irving Magee, which allows the fund to increase, decrease or terminate the money manager.
“If you win, you win twice because if the performance is good, the fund benefits, and good performance means good revenue back from the investment,” Mr. Burns said.