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Texas ERS proposes private equity plans for 2022

The US pension plan proposes a 5-year tactical pacing model to meet its private equity allocation target.

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Institution: Employees Retirement System of Texas
Headquarters: Austin, US
AUM: $33.9 billion
Allocation to alternatives: 33.1 percent

Following its August board meeting, the Employees Retirement System of Texas has approved the proposed private equity tactical plans for fiscal year 2022, reported by affiliate title Private Equity International.

For the fiscal year 2022,

  • Texas ERS is proposing to target commitments totalling $800 million with a 25 percent range ($600 million to $1 billion);
  • The private equity team recommends 10-12 new primary fund commitments and six to eight new co-investments across the risk spectrum and geographies;
  • The recommendation remains consistent with the pension’s steady investment pace. With this strategic pacing model, ERS forecasts the PE program returning to its 13 percent allocation target by 2026;
  • Buyouts will remain the dominant strategy of the portfolio, followed by growth equity and venture capital.

For the current fiscal year, the PE program has received a total commitment of $799.6 million through eight existing fund managers, four new relationships and 10 co-investments. The PE team expects to approve an additional $65 million before the end of 2021, bringing the total committed amount to $864.6 million.

Illustrated below are the retirement trust’s recent fund commitments and the geographical and strategy composition of the private equity portfolio.

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