Investments

CalSTRS diversifies proactive private equity portfolio

Mon, 21/04/2014 - 19:11

The California State Teachers’ Retirement System (CalSTRS) has committed USD200 million to diversify its Private Equity Proactive Portfolio, which reaches small, niche emerging managers including those in under-served domestic markets.

This latest commitment expands the programme, established in 2003, to USD1.9 billion.
 
The programme adds a new partner, Chicago-based Muller & Monroe Asset Management, with a USD100 million commitment.
 
BAML Capital Access Funds Management (BAML, a subsidiary of Bank of America Corporation), an existing relationship, is expanding with another USD100 million commitment.
 
CalSTRS will invest in Muller & Monroe’s USD400 million commingled fund, known as the M2 Private Equity Fund of Funds II (MPEFF II). The commingled fund focuses on emerging domestic markets, including funds that are managed by newer and next-generation managers and by seasoned investors focused on a specific niche or theme found in the lower-middle market.
 
“These two partners are leaders in the emerging manager space, which unlocks the potential of small managers in their first, second or third institutional funds, and in the underserved areas of California’s urban and rural areas,” says CalSTRS chief investment officer Christopher J Ailman. “This strategy is crucial to our efforts to generate long-term value in new and innovative ways.”
 
“CalSTRS views MPEFF II’s investment strategy as consistent with the objective and principle guiding CalSTRS’ Private Equity Proactive Portfolio,” says CalSTRS portfolio manager Solange Brooks. “The Private Equity Proactive Portfolio was created to diversify the Private Equity Core Portfolio into unique opportunities with innovative strategies.”
 
CalSTRS will invest in its fourth BAML fund since 2003, targeting under-served domestic markets, which is the BAML specialty. CalSTRS has the option of increasing its commitment to USD200 million or more in the future.
 
“CalSTRS has been committed to traditionally under-served communities in the inner cities and rural areas since 2003 and this fund directs badly needed capital to that sector,” Brooks says.
 
The Private Equity Proactive Portfolio was created within CalSTRS’ USD21.5 billion private equity portfolio under the leadership of director Margot Wirth. The Proactive Private Equity Portfolio has 123 active funds managed by three separate accounts, BAML, Invesco, and now Muller & Monroe.


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