Texas Tones Down Pace But Still Has Plenty Of Cash

The Employees Retirement System of Texas is looking to commit roughly $500 million to private equity over its next fiscal year, on the road to reaching its target allocation to the asset class. The target marks a drop from this year’s commitment goal.

The $21 billion pension fund will aim to pledge the $500 million–no less than $375 million, and no more than $625 million–during its fiscal-year 2011, which will begin on September 1, according to spokesperson Mary Jane Wardlow. Staff will seek the board’s approval for this amount at its August meeting, she said.

The goal for its current fiscal year was to commit to 10 funds, pledging $600 million in total within a possible range of $450 million to $750 million. So far in fiscal 2010, the limited partner has committed about $420 million to six funds: Advent Latin America V, a mid-market buyout vehicle; HgCapital 6, a European mid-market buyout fund; LGT Crown Global Secondaries II, a secondary fund; Mason Wells Buyout Fund III, a lower mid-market buyout fund; Quantum Energy Partners V, a mid-market energy growth equity fund; and Riverside European Fund IV, a small-market buyout fund. Individual pledges have ranged in size from $50 million to $90 million.

The pension fund made its initial private equity commitment in 1998 but did not make its next one until 2007. Through May 31, the pension fund had pledged a total of $1.7 billion to 23 funds. The plan sponsor’s target allocation to private equity is 8 percent.

Consultant Altius Associates assists Texas in identifying funds to invest in, including buyout, growth equity, mezzanine, secondaries, turnaround, restructuring and distressed debt funds. Co-investments and direct investments are not permitted.