Dear Colleague,

The Illinois Municipal Retirement Fund, the state's second largest pension fund, is currently at 86 percent funding and researching opportunities to increase its allocation to international private equity, Dhvani Shah, CIO at IMRF told LPEJ. 

 

Below, Dhvani discusses due diligence, manager selection, and how these high levels of funding are allowing IMRF to commit to long term asset classes like private equity.

 

When it comes to smaller and emerging markets, David Ross, Managing Director at Chevy Chase Trust Investment Advisors, explains in our second interview why his firm has taken a specific interest in the Philippines, Singapore, Colombia and Peru. 

 

"I personally dislike the phrase emerging markets," said Ross. "It tends to be used for three to four countries, when there are in reality 50 or 60 countries, each with their own dynamic."

 

Look for next week's newsletter, when we preview the 5th Annual Private Equity Brazil Forum's Brazilian Pension CIO Roundtable with Gabriel Amado de Moura, CIO at Brazil's fifth largest pension fund, Funda��o Itaubanco. 


Regards,   

 

 

Seth Fraser

Editor, Latin Markets, Latin Private Equity Journal

Seth.Fraser@latinmarkets.org

212.213.3272

Subscribe For Free

 
LPEJ: How do you think of your portfolio with regards to developed and emerging markets? 
 
DS: We don't divide our private equity allocation between developed and emerging markets. Within private equity we have two dedicated separate accounts, and then we have a direct program of $185 million. The two separate accounts are $1.1 billion in aggregate commitments. Our direct funds program is all US currently. The current allocation to alternatives is four percent and the target is six percent. We're likely to increase this allocation based on our asset liability modeling study, which will be completed in November.
 
LPEJ: What is your current experience in Latin America to date? 
 
DS; Our current international private equity exposure is through one of our separate accounts, which has a global mandate. In the future, we may pursue international private equity opportunities via our direct program. We're analyzing managers in this space, including their different strategies and track records. International private equity-including investment opportunities in Latin America-would further diversify our portfolio and capture growth opportunities outside of the US. 

LPEJ: What type of returns do you expect on your investments in private equity? 
 
DS: For IMRF, private market returns need to be higher than a liquid public markets portfolio. Our benchmark for alternative investments is 9 percent. When we look at private equity investments on a standalone basis, we like to see at least 2x invested capital and 20 percent net for a buyout fund. That's just a guideline though, and return expectations vary with investment strategy. Private equity is all about how... (READ THE FULL INTERVIEW HERE)
 
Event Advertisement

Network with 150+ LPs!

Register today for the 5th Annual Private Equity Brazil Forum and join Brazil's most
important gathering of private market investors.

Confirmed attendees now include:

* Caisse de Depot et Placement du Quebec
* Previ Pension Fund
* Healthcare of Ontario Pension Plan
* Funda��o Itaubanco
* Hartford HealthCare Pension & Endowment
* Funda��o CESP
* Helmsley Trust

December 9-10 | Hotel Unique | S�o Paulo, Brazil
 
LPEJ: How is your portfolio diversified across asset classes and geography? 
 
DR: We've been very focused on emerging markets more so than the developed markets over the last few years. We are becoming more interested in Europe too and moving toward an underweight in the US. We are trying to focus on under the radar emerging markets. When people say emerging markets they usually mean China or Brazil. We do very little in those two areas because it's hard to find good values as everybody is already there. Our favorite markets in emerging or smaller markets are the Philippines, Singapore, Colombia and Peru. Our target for appropriate accounts in private equity is in the five percent range. We also invest in real estate and hedge fund investments for a total of roughly ten percent. 
 
LPEJ: How much is invested in Latin America specifically? 
 
DR: Around ten percent. Within our traditional portfolio it would be five to ten percent in public equities and then another five to ten percent on the private equity side where appropriate. Private equity is a major focus for us and we've been actively working with a couple firms. In terms of our private equity exposure, Latin America is the bulk of it, even more so than what we're doing in the US. 
 
In the large developed markets such as the US it's hard to find value. In our opinion, a lot of the private equity return in the US comes from leverage and financial engineering. In the smaller markets and Latin America, private equity can really be a difference maker... (READ THE FULL INTERVIEW HERE)
 
Who's Talking to Latin Private Equity Journal?

LPEJ Issue 1 - Siguler Guff, Peru State Pension Fund
LPEJ Issue 2 - ATP Private Equity Partners, HarbourVest Partners
LPEJ Issue 3 - North Carolina State Treasury, Colombian Ministry of Finance, Asofondos
LPEJ Issue 4 - Banesprev, Real Grandeza, Prudential Real Estate Investors
LPEJ Issue 5 - ACON Investments, TIAA-CREF, Overseas Private Investment Corporation
LPEJ Issue 6 - Okayama Metal & Machinery Pension, Weyerhaeuser Solutions, UBS Global Asset Management
LPEJ Issue 7 - Advent International, EY, New Mexico PERA
LPEJ Issue 8 - Denham Capital, Oregon State Treasury
LPEJ Issue 9 - FUNCEF, Terranum Capital
LPEJ Issue 10 - Hamilton Lane, VBI Real Estate
LPEJ Issue 11 - Caisse de Depot et Placement du Quebec, Icatu Fundos de Pensao
LPEJ Issue 12 - Quilvest Conference Call
 

 
View Latin Markets' Complete Event Schedule Online
 



 

Follow us on Twitter
About Latin Private Equity Journal and Latin Markets

 

Latin Private Equity Journal (LPEJ) is a Latin Markets weekly newsletter and quarterly publication featuring interviews with LPs, GPs, government officials and private equity thought leaders active in Latin America.

 

Latin Markets produces event platforms that include a wide range of business development and educational vehicles enabling Latin America's most active investors and fund managers to more adeptly navigate socio-economical, regulatory and financial considerations within the market.

 

Markets Group | 10 W. 37th Street 7th fl. New York, NY 10018