Texas pension PE plan calls for $950 mln in commitments

The plan calls for $950 million in commitments, with an allowable range of roughly $700 million to $1.2 billion. The retirement system’s board of trustees approved the plan at its Aug. 19 meeting.

“Going forward, (there will) be high selectivity in new relationships. Possibly you won’t see any. You’ll see a lot of re-ups,” said Wesley Gipson, director of private equity, at the meeting, adding that the system’s long-term goal is to achieve its 10 percent target allocation. “Based on current committed levels, we expect in the vicinity of 2016 to hit our 10 percent target.”

The board of trustees increased its target allocation to private equity to 10 percent of retirement system assets last year. The Employees Retirement System of Texas established its allocation to private equity in 2008 with an 8 percent target.

The tactical plan marks a significant reduction from the $1.25 billion commitment target that was approved last year. Even so, the retirement system has made great strides in approaching its target allocation recently, as its exposure to private equity rose to 7.9 percent in the year ending June 30, from 6.3 percent, according to meeting materials.

That exposure likely will continue to rise as its commitments to 2014 vintages are put to work. The retirement system was extremely active during the current fiscal year, Gipson said, committing $888 million to private equity across 11 fund investments and six co-investments.

“2014 is our heaviest year today in terms of actual commitments in dollar terms,” Gipson said.

The Employees Retirement System of Texas private equity portfolio had a net asset value of $2.05 billion as of June 30. The portfolio had generated a multiple of 1.24x as of June 30, using the ”Total Value to Paid-In” ratio, according to meeting materials.