Grosvenor Capital Management has stopped accepting new investment management business from public pension fund clients in Illinois.
Grosvenor withdrew as a finalist in a search for hedge funds-of-funds managers to manage a total of $500 million by the $16.3 billion Illinois State Universities Retirement System, Champaign.
Michael J. Sacks, Grosvenor chairman and CEO, declared his firm's intentions in a letter to Daniel L. Allen, SURS' chief investment officer.
In the letter, Mr. Sacks expressed concerns about reputation risks to clients and his firm as a result of his political and civic activism. Mr. Sacks, who didn't detail his activism in the letter, is a political contributor and involved in civic activities through foundations and non-profits.
“Sadly, recent media accounts and erroneous reports regarding or stemming from my civic engagement, and the increasing frequency of such reports, has led me to believe that the only option available to eliminate any semblance of conflict is to not pursue any new business with the state of Illinois at this time,” Mr. Sacks wrote in the letter.
Mr. Allen said in an e-mail that SURS “respects their decision to withdraw from consideration for the mandate. We wish the firm continued success.”
Grosvenor will continue to manage assets for its one existing state mandate, a $421.4 million hedge funds-of-funds allocation for the $46 billion Illinois Teachers' Retirement System, Springfield.
Dave Urbanek, TRS public information officer, said the Grosvenor relationship “has been fruitful for the system and its members.” He declined to comment further on Grosvenor's decision.
Grosvenor stopped doing business with public pension funds in Chicago in 2004 and Cook County in 2011.
A Grosvenor spokeswoman said, “Being able to remove himself (at the city and county levels), allows (Mr. Sacks) to be engaged, whether it’s politically or civically.” Grosvenor would not be able to make political contributions at the state level because of its TRS relationship.