Chicago Teachers’ Green Lights $400M Credit Portfolio Structure

The $13 billion Chicago Teachers’ Pension Fund has further diversified its investment program through private credit at their November board meeting. Officials set a private credit portfolio structure and made an allocation to a new private equity fund as well.

The private credit program was launched in 2023. A target allocation of 3%, amounting to approximately $350 million to $400 million, was established. In August 2023, the board approved a strategic plan for the private credit program, commencing a search for qualified investment managers that has continued throughout this year.

The portfolio structure was approved in November. The asset mix is 36% core (direct lending), with 16% large market and 20% small-to-medium market; 31% specialty finance, 25% opportunistic, and 8% niche/fund of funds.

Three managers – Jefferies Credit Partners, Oak Hill Advisors, and Turning Rock Partners – will oversee the direct lending mandate. Two managers, CFI Partners and Silver Rock, will oversee the opportunistic mandate. The specialty finance mandate will be overseen by 400 Capital Management, with the potential for additional managers to be incorporated into this strategy in the future, officials announced.

An additional allocation of $50 million was made to the $1 billion private equity portfolio as part of the pension fund’s pacing plan for fiscal year 2024, with expected re-investments from existing managers. The trustees approved a $10 million allocation to Palladium Equity Partners Fund VI. CTPF has been investing with Palladium Equity Partners since 2004, starting with Fund III, subsequently investing in Fund IV (2012 vintage) and Fund V (2017 vintage).