Pension System: Texas Teachers’ Retirement System
Assets Managed: $110 Billion
Private Equity Investments: $11.1 Billion (Aug. 31, 2011)
Private Equity Allocation: 10.4% (Aug. 31, 2011)
Private Equity Allocation Target: 12%
Chief Investment Officer: Britt Harris
Filling some big boots, Richard Hall has been promoted to replace Steve LeBlanc as head of private equity for the $110 billion Texas Teachers’ Retirement System, confirmed Howard Goldman, the system’s director of communications. LeBlanc, an innovative private markets chief, is perhaps best known for steering giant separate account deals last fall in which Texas Teachers’ committed $6 billion to Apollo Global Management and Kohlberg Kravis Roberts & Co. He plans to step down in June.
Hall, who has worked at Texas Teachers since 2008, will be managing director for private equity. In his current role, he is in charge of planning the strategy for the system’s $11 billion private equity portfolio, and he also leads the pension’s principal investing group, which makes direct private investments alongside GPs. Prior to joining Texas Teachers, Hall did real estate investment banking at Bank of America.
Altogether, Texas Teachers has $11.1 billion, or 10.4 percent of its assets, in invested private equity capital. The system’s private equity target is 12 percent. Last year, Texas Teachers said it planned to make more than $7 billion in private equity commitments through 2015. As senior managing director of private markets, LeBlanc’s team invested $20 billion in more than 90 investments over four years, including investments in private equity, venture capital, real estate and commodities.
Besides promoting Hall, Texas Teachers also is elevating Eric Lang to the role of managing director of real assets, an area that includes real estate and commodities and has a 15 percent portfolio allocation. Before joining Texas Teachers in 2006, Lang was a managing director at Kennedy Wilson, a real estate investment firm.
Both men, who currently report to LeBlanc, now will report to Jerry Albright, the pension’s deputy chief investment officer. First mention of the two promotions was made by LeBlanc himself in a speech in Los Angeles, according to Private Equity International.
Late last year, LeBlanc set Texas Teachers on a course to commit $6 billion as part of a separate account arrangement to be managed by KKR and Apollo. Unlike traditional private equity commitments, where investors typically have little control once their money is pledged, these commitments would be made as a collaborative effort in which Texas Teachers would have access to customized investments and strategies that included, essentially, a veto. And in exchange for these giant commitments, Texas Teachers’ would get more favorable fees and terms, although the details of those arrangements have not yet been disclosed.
This separate account model, which started making waves with the Texas Teachers commitment, and with a similar commitment to The Blackstone Group by the New Jersey Division of Investment, is being closely watched by other large pensions, which are eager to trade on their size and clout to extract more control and better fees compared with typical private equity funds.
In April, however, just months after Texas Teachers announced these separate account pledges, LeBlanc announced he planned to return to the private sector. It is expected that he will return to the real estate world, where he worked prior to 2008, when he was hired by Texas Teachers chief investment officer, Britt Harris.
In 2011, LeBlanc’s salary was $360,000, and he earned a performance bonus of $268,930. No information on salaries for Hall and Lang was available.
Texas Teachers is the nation’s sixth largest pension system, which manages the retirement assets for 1.3 million teachers and retirees.