Having lots of money means never having to beg for business. That appears to be the attitude by private equity firms in Illinois. A new Illinois law bars state pension funds from allocating money to private equity unless the p.e. firm signs a sworn affidavit attesting that none of its portfolio companies do business in war-torn, human-rights violating Sudan. Private equity firms don’t seem concerned. “We’ve only had one out of 20 managers willing to give an affidavit under oath,” Bon French, CEO of Adams Street Partners, told Crain’s Chicago Business. “They don’t need Illinois state money. When you raise an issue like this, they say, ‘Forget it.’”
Easy for them to say, but it looks a little harder for local pension plans to accept. William Atwood, executive director of the Illinois State Board of Investment, told InstitutionalInvestor.com last month, “We are already the funding of last resort for private equity firms. Due to transparency concerns this could cause them to no longer look to us.” In the most recent development, Crain’s reports that there is some movement among Illinois pension plans to alter the language to read something like “to the best of the manager’s knowledge,” there is no involvement with Sudan. Whether that passes muster with the p.e. firms remains to be seen.