Illinois Teachers’ commits $97m to Oaktree, Sofinnova

The $34.6bn pension has been ‘overhauling’ its private equity programme to expand its capabilities around co-investing, secondaries and international investments.

Illinois Teachers’ Retirement System committed almost $100 million to private equity and venture capital recently, choosing Oaktree Capital Management and Sofinnova Venture Partners to manage its capital.

Illinois Teachers’ allocated $67.5 million to Oaktree’s third European Principal Fund, which is targeting €2.5 billion to €3 billion. The fund will target distressed debt investments in mid-market European companies. It will focus on companies that are “undervalued” because of financial distress, dislocation, owners who are forced to sell or similar situations.

Illinois Teachers’ has committed $620 million to similar funds during the past three years.

The $34.6 billion pension also recently committed $30 million to Sofinnova , which closed its sixth vehicle on around €260 million in January, shy of its €300 million target.

In 2009, Illinois Teachers’ hired Zachary Doehla to head up the private equity programme, replacing Lamar Villere who left to join the Tennessee Consolidated Retirement System. That year, the pension bumped its private equity allocation to 10 percent from 8 percent.

The pension has been selling off assets to raise capital to keep meeting its obligations to members, but had been able to preserve its private equity holdings. The pension had planned last year to sell $3 billion in investments to pay benefits.

The pension is allocating up to $1.1 billion in fiscal 2011 to private equity and is overhauling its programme to expand into co-investments, secondaries and international investments. The pension has been reviewing its “older” private equity investments “with an eye toward selling some of these assets”, the pension said last year.