Texas Permanent School Fund seeks emerging markets debt managers
By Christine Williamson | February 1, 2013 2:34 pm
Texas Permanent School Fund, Austin, will issue an RFP for one or more managers to run a total of $1.3 billion in local currency emerging markets debt, a new allocation for the $26.8 billion sovereign wealth fund.
The decision came on Friday as the Texas State Board of Education, which oversees management of the fund, approved the recommendation made Thursday by the Committee on School Finance/Permanent School Fund, according to a webcast of the meeting.
Carlos Veintemillas, deputy chief investment officer, told finance committee members that the target allocation to local currency emerging markets debt would represent 5% of total plan assets.
Separately, state education commissioners approved a change in the structure of private equity investments for the Permanent School Fund that the finance committee had put forward.
John Grubenman, TPSF's director, private markets, told the finance committee on Thursday that the fund's two existing discretionary private equity managers of managers, Neuberger Berman Group and Credit Suisse Asset Management, have invested all but $95 million of the $1.3 billion allocation they have split evenly since 2009.
The private equity investment plan is to commit and/or invest an additional $925 million over the next three years, with $300 million in both 2013 and 2014, and $325 million in 2015.
Mr. Grubenman recommended a hybrid structure for the new round of private equity commitments/investments. External management of traditional discretionary private equity funds of funds will continue to be used for an as yet undetermined part of each portfolio. For the balance of the investment, the State Board of Education will delegate investment authority to a joint committee composed of internal TPSF staff and portfolio managers from the external money managers. The committee will be empowered to make decisions about private equity co-investments, secondary markets and other quick-closing investment opportunities.
Both Neuberger Berman and Credit Suisse will be asked to submit bids for managing the next phase of private equity investments. If needed, an RFP for bids from other private equity managers might be sought, according to the webcast.
Finally, state education commissioner Patricia Hardy was reappointed by her peers as chairwoman of the finance committee and Lawrence Allen was appointed vice chairman.