The Illinois State Universities Retirement System has committed $100 million (€68 million) to private equity fund of funds Adams Street Partners 2009 Global Offering Program. The The $14.6 billion public pension recently approved the commitment despite being over-weighted in the asset class.
“We’re actually over our target right now given the condition of the public markets,” executive Dan Slack told PEO. Slack is referring to the 'denominator effect' which has affected US pensions nationwide. Capital devoted to the asset class has risen as a percentage of total assets under management due to a fall in the value of public portfolios.
The board of trustees in June approved a 1 percent increase of the pension’s target private equity allocation to 6 percent as the result of an asset liabilities studies. However, the adjustment did not bring the target to the pension’s actual allocation which on 30 June was 7.6 percent of total capital.
Illinois SURS has no percentage at which it would be required to decrease its allocation to private equity, said Slack adding that the pension continues to seek investments in the asset class.
“We do modeling to look at how much we need to deploy into the private equity space to over time maintain the allocation at the weight we seek to stay at,” said Slack. “At this point, as evidenced by the action we just took, we think that it’s appropriate to make this commitment for 2009.”
Illinois SURS’ reaction to the denominator effect is significantly different than a number of other pensions that have sought liquidity by freezing commitments to private equity or going to the secondaries market, according to the October issue of Private Equity International.