Illinois Teachers’ Retirement System, which has $6.7 billion in private equity assets under management, has made secondaries central to its near-term strategy.
Opportunistic secondaries sales “should be a consideration” over the following fiscal year, according to the pension’s FY19 Private Equity Tactical Plan seen by Secondaries Investor.
Market dynamics, which are favourable to sellers, offer an opportunity to “reshape the portfolio as desired, shed non-core managers and pursue liquidity for the asset class”, the plan notes.
In December 2017, the pension’s investment committee approved Project Lincoln, the sale of 20 funds with a combined market value of $766 million, according to meeting minutes.
This deal, which eventually involved the sale of 19 fund positions, formally closed on 31 March, according to minutes from the May 2018 meeting.
TRS is 13.6 percent exposed to private equity, according to its FY 2019 plan, against a target of 15 percent. Around 83 percent of its holdings are in the “corporate finance” sub-sector, which includes buyout and growth, with venture capital and special situations making up the remainder.
Commitments made this year include a combined $70 million to Inflexion’s Partnership Capital Fund II and Buyout Fund V, $100 million to Clearlake Capital Partners V and €100 million to EQT VIII, according to PEI data.
TRS is one of a handful of US pensions that have sold on the secondaries market in 2018. In April, Ardian bought $750 million of private equity stakes from Alaska Permanent Fund, Secondaries Investor reported.
In August, the Los Angeles County Employees’ Retirement Association revealed that it is aiming to sell a portfolio of 81 “non-core” fund stakes worth around $1.1 billion in two separate lots, as it aims to reduce its administrative burden and double down on key relationships.
Pensions and sovereign wealth funds accounted for 20 percent of sellers by volume on the secondaries market in the first half of 2018, the largest single group, according to research by Greenhill Cogent.