TRS of Texas likely to go after FoFs
The $82 billion Teacher Retirement System of Texas intends to commit roughly $2.5 billion to private equity in the coming year and much of that will be channeled through funds-of-funds.
The limited partner has not yet finalized which sub-strategies it will target, but one recent pledge of $100 million went to fund-of-funds manager Morgan Creek Partners Asia, according to spokesperson Howard Goldman. A regulatory filing reports that the vehicle has a $250 million target.
In March, the Texas LP unveiled pledges totaling $400 million to two captive accounts managed by Credit Suisse’s Customized Fund Investment Group. The pension fund pledged $300 million to the Credit Suisse CFIG Middle Market Buyout Program, a captive fund-of-funds, and a $100 million commitment to the Credit Suisse Re-Up Bridge Program to gain exposure to managers no longer deemed emerging.
Texas Teachers commits to primary, secondary and co-investments; emerging managers; opportunistic investments, such as investments in the management entity of a private equity investment firm or sponsor; and public-to-private transactions.
The state pension fund expects its fund managers or sponsors to try to avoid investing in companies or enterprises that derive a large part of their sales from products or services intended exclusively to “appeal to a prurient interest…,” according to the LP’s investment policy.
Texas Teachers’ target allocation to private equity is 10%, with a range of 5% to 15 percent. As of June 30, the actual private equity allocation stood at 6.6 percent.