Texas Permanent picks Neuberger Berman for $900 million private equity partnership

Texas Permanent School Fund, Austin, hired Neuberger Berman Group for a $900 million private equity strategic partnership.

The Texas State Board of Education, which oversees management of the $26.9 billion Permanent School Fund, authorized the hire at its April 19 meeting along with other finance committee recommendations, according to a webcast.

Neuberger Berman's hire is the final step in the restructuring of the education fund's private equity program to a hybrid structure. The new structure combines a specialized private equity portfolio managed by Neuberger Berman with a core portfolio jointly managed by TPSF investment staff and Neuberger Berman managers.

The new partnership gives Neuberger Berman discretion over management of a portfolio of private equity co-investments and secondary market investments.

For the balance of the investment, the board has delegated investment authority to a joint committee composed of internal TPSF staff and Neuberger Berman portfolio managers. The committee will be empowered to make decisions about core private equity investments.

The breakdown of the new $900 million private equity allocation into each discrete portfolio was not disclosed during a webcast of the April 17 finance committee meeting.

Both Neuberger Berman and Credit Suisse were asked to bid for the new allocation. The board accepted the recommendation of investment staff and consultant NEPC to hire Neuberger Berman for a three-year contract.

Neuberger Berman and Credit Suisse Asset Management each were awarded $650 million in 2009 to manage in private equity separate accounts. Holland Timmins, TPSF's executive director and chief investment officer, said both firms' mandates are very close to being fully invested. Both firms will continue to manage these portfolios.

The additional commitment brings TPSF closer to its 6% private equity target allocation, said John Grubenman, director of private markets. Private equity assets now total 4.8% of total assets.