TIAA-CREF Raising Distressed Fund of Funds


Fund: Name unclear

Strategy: Distressed fund of funds

Target: $400 million

The Teachers Insurance and Annuity Association College Retirement Equities Fund, or TIAA-CREF, long one of the most prolific investors in buyout funds, has launched its first fund of funds to give other investors a chance to cash in on its general partner relationships.

Details are scarce, but Buyouts has learned from two sources familiar with the new fund that the New York-based limited partner is raising around $400 million for a first-time fund of funds targeting distressed debt and equity funds. The fund would join a growing cadre of distressed fund of funds managers, including Drum Capital Management, Siguler Guff & Co., and MB Global Partners, new outfit founded by Sigular Guff veteran Maria Boyazny.

Our sources declined to provide or were unfamiliar with the exact name of the fund or where it is in the fundraising process, though one said that the fundraise is in the “late innings.” It’s also unclear who is managing the fund, which presumably would be housed in the company’s alternative investments group.

TIAA-CREF, which manages $426 billion of retirement money for people in the academic, medical, cultural and research fields, has become a major investor in private equity funds in recent years, investing around $1.5 billion to $2 billion annually in the asset class. A February 2009 article in Buyouts suggested the firm planned to increase its exposure to U.S. buyout funds, while stemming its commitments to European and Asia-focused funds, which had been a focus in 2008.

The alternative investments group has been reorganizing this year following the departure around May of Sheryl Schwartz, who had spearheaded the company’s foray into private equity investing after joining in 1988. The shake-up involved the integration of the alternative investments group, which includes private equity, co-investments and timber, into the Portfolio Management division headed by Heather Davis and the Private Placement Investments division headed by Marina Mavrakis. Schwartz has since joined Perseus LLC, the Washington, D.C.-based merchant bank and private equity fund management company, as a senior managing director working on mezzanine debt, private equity investments and investor relations.

In the past, TIAA-CREF has backed funds managed by The Blackstone Group, The Carlyle Group, Cerberus Capital Management and TPG, among others.

Executives at TIAA-CREF declined to comment.