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Houston Firefighters’ PE allocation swells to 33%

The system ranks as one of the largest allocators by percentage to PE, even after it sold a portion of its portfolio last year.

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Houston Firefighters’ Relief and Retirement Fund has made more than $600 million in private equity commitments in FY 2023, as the system ranks among the largest allocators by percentage to the asset class.

Many institutional investors have reduced their pacing and even their commitment sizes to private equity due to overallocation issues caused by the denominator effect.However, the $5 billion Houston Firefighters’ pension system has gone in the opposite direction with sizable commitments to PE – it has a 33 percent current allocation to private equity – one of the highest figures among public pensions in the nation.

Houston Firefighters’ FY 2023 private equity commitments and other details were included in board documents and meeting minutes obtained by Buyouts.

Houston Firefighters’ allocates more to private equity than it does to any other strategy, according to the documents. The system allocates 27 percent to domestic and international equity.

The system has a target range of between 10 percent and 37 percent to private equity, according to the documents.

Houston Firefighters’ made commitments across a wide spectrum of buyouts, venture and infrastructure funds it categorizes as private equity in FY 2023.

The largest commitments were $125 million to EQT X, $100 million to Hellman & Friedman XI and $100 million to EQT Infrastructure Fund V.

The system is also considering a possible commitment to the Coller International Partners IX-A secondaries fund, according to board documents.

Houston Firefighters’ has taken steps to balance its exposure to private equity. Last year, the board approved the system’s investment staff to sell up to $375 million of its private equity portfolio, according to board minutes from its May 2022 investment committee meeting.

Houston Firefighters’ FY 2023 commitments include:

• $35 million to AE Industrial Partners III
• $20 to Advent International GPE X
• $40 million to Apax XI
• $50 million to Bertram Growth V
• $40 million to EQT Infrastructure Fund VI
• $125 million to EQT X
• €40 million to EQT Ventures III
• $100 million to Hellman & Friedman XI
• $30 million to LightBay Investment Partners II
• €50 million to Nordic Capital Fund XI
• $50 million to Thoma Bravo Discover IV