Texas TRS pumps $4 bln into Apollo, KKR accounts

  • Texas TRS allocates $2 bln each to Apollo, KKR separate accounts
  • Capital to be used for “tactical opportunities”
  • Previous accounts have returned more than 15 pct each year

The $130 billion retirement system re-upped $1 billion each to Apollo and KKR for existing separately managed accounts. TRS also committed an additional $1 billion to each firm for new accounts that will target “an emerging set of tactical opportunities,” Helton said.

It is not clear how Apollo and KKR will invest the new accounts. Helton did not respond to a request for additional comment as of press time.

TRS formed its separate accounts with KKR and Apollo in 2011, committing $3 billion to each account, which included limited partner-friendly terms and conditions. TRS structured the accounts with very broad investment mandates, with the ability to invest in private equity, real estate, energy, credit and opportunistic strategies, according to Helton’s email and retirement system documents.

Both accounts produced an annual return in excess of 15 percent per year, Helton said.

Blackstone Group has also been collecting fresh commitments for its separate account business, inking re-ups to its Tactical Opportunities fund from the California Public Employees’ Retirement System, New Jersey Division of Investment and Oregon Public Employees’ Retirement Fund in the last year.

TRS had an 11.8 percent allocation to private equity as of Dec. 31, according to retirement system documents. The portfolio has generated a five-year return of 16.8 percent as of the same date.