Texas Teachers directs $150m-plus to emerging managers

Teacher Retirement System of Texas committed $155 million to emerging private equity managers last year.

Emerging managers have had a difficult time in the current fundraising environment, with many LPs focusing on bigger managers with long track records. Emerging manager programs like TRS Texas provide badly needed fuel for the emerging manager ecosystem, especially in such a constrained market.

TRS Texas managing director Kirk Sims detailed the emerging managers program at the system’s board meeting held on February 15. Buyouts watched a broadcast of the meeting.

The emerging managers program outperformed its benchmark by 227 basis points over the past year, with private equity as the main driver of those results, according to Sims’ presentation. The emerging managers program includes investments in real estate and real assets/infrastructure funds.

47 percent of TRS Texas’s commitments to emerging private equity managers went to diverse-owned firms, the presentation said.

The NAV of emerging manager private equity program stood at $1.5 billion, according to the presentation.

In recent years, real estate funds have taken the biggest share of commitments in the emerging managers program, according to the presentation.

“The niche aspect of real estate allows us to be pro-active in so many different opportunities. Private equity is either going to be lumped into being a buyout or growth equity or VC fund. There’s not as much room to be innovative in something like RV storage or industrial storage,” Sims said.

According to chief investment officer Jase Auby, Texas TRS’s highly influential private equity program has a “major multiplier” across the industry.

“Our strategy is getting copied almost note for note,” Auby said.

Correction: An earlier version of this story contained a misspelling of Jase Auby’s name. The report has been updated.