Texas Teachers: $389 mln to PE via Cinven, more

  • Biggest commitment to Cinven VII
  • Pledges to separate account, co-investment vehicle
  • Texas mulls adding 1 pct to 2 pct to its PE target

Teacher Retirement System of Texas committed $389 million to private equity in April, with the biggest commitment going to Cinven.

The $150 billion system also pledged to a co-investment aggregator and a single-LP fund. All commitments were made during April.

The pension committed €225 million ($252.7 million) to the seventh Cinven fund, which focuses on large international developed-markets buyouts and which closed on its hard cap of €10 billion ($11 billion) on May 2.

Texas Teachers also committed €100 million ($112 million) to Triton Investment Advisers’ Timberlake fund, a separately managed account that focuses on medium and small buyouts in international developed markets.

For co-investments, Texas Teachers committed $25 million to GHP VI, a large buyout co-investment platform managed by GHP CI Aggregator.

The pledges reflected a slower pace of PE commitments than the pension made in March. In that month, Texas Teachers committed $720 million to the asset class, headlined by $600 million to Blackstone’s latest megafund.

The pension fund also made significant commitments to other private-markets assets in April, with $510 million going to real estate and $350 million to energy and infrastructure.

The pension committed $300 million to Lone Star Real Estate Partners Fund VI, $200 million to Lone Star Residential Mortgage Fund II and €9.24 million ($10.3 million) to CBRE French Logistics Feeder, a co-investment vehicle that invests alongside the CBRE Europe Value 2 fund.

In real assets, Texas Teachers committed $200 million to First Reserve Fund XIV, a diversified energy fund and $150 million to BlackRock’s GEPIF III Side Car T, which focuses on domestic infrastructure.

Looking ahead, Texas Teachers is weighing changes to its asset allocation, in an effort to boost its current 7 percent expected investment return to 7.15 percent, 7.25 percent or 7.35 percent. To get there, the pension will likely add more assets to private markets, and it will consider adding leverage in its fixed-income portfolio.

Texas Teachers is considering adding 1 percent or 2 percent to private equity, 1 percent to real estate and 1 percent to energy, natural resources and infrastructure. It would reduce its global public equity allocation to account for the changes.

Its investment staff will present new asset-allocation mixes to the investment committee and board for approval in July, with the aim of writing new investment policies by September.

The system has a 13.9 percent allocation to PE, with a 13 percent long-term target.

Action Item: Texas Teachers’ latest 25 investment committee meeting materials: https://bit.ly/2ZBxFnO