Texas Municipal Retirement System, Austin, committed or invested a total of $1.353 billion to nine alternative investment strategies in June.
Trustees of the $28.4 billion fund approved the recommendation of investment staff to commit a total of $600 million to three private credit funds during their June 28-29 meeting, confirmed Bill Wallace, TMRS' spokesman, in an email.
The largest commitment was $250 million to AG Direct Lending Fund III (unlevered), managed by Angelo Gordon & Co., a new manager for TMRS.
In the first of two allocations made to existing manager Varde Partners, TMRS committed $200 million to Varde Private Debt Opportunities Fund, which will focus on special situations global direct lending opportunities.
In the first of two allocations to H.I.G. Capital approved by trustees during the board meeting, an additional $150 million was committed to H.I.G. Whitehorse Trinity, another global direct lending fund. The fund previously committed $150 million to the fund in December 2015.
As part of an ongoing effort to increase the number of direct investments in hedge funds, trustees accepted the recommendation of investment officers to wind down a customized hedge fund-of-funds portfolio — known as BAAM Treaty Oak Fund — managed by Blackstone Alternative Asset Management.
TMRS' first foray into hedge funds was through an investment of $1.5 billion with BAAM in August 2014. Documents from the fund's June board meeting showed staff have been decreasing the Blackstone portfolio to $610 million through direct investments in hedge funds.
Trustees approved moving $250 million to a new customized hedge fund strategy — BAAM Stone Oak Fund — a multistrategy hedge fund that will target "idiosyncratic opportunities across geographies and asset classes," the hedge fund report to the board showed.
Also approved was a $100 million investment in a sidecar investment vehicle — Stone Oak Select — which BAAM portfolio managers will invest in "single security allocations where excess capacity exists after commingled and customized offerings have been allocated," investment officials said in the board report.
The fund also invested $50 million in Varde Asia Credit Fund. The Varde Partners fund will invest in real estate debt in the Asian region.
In 2015, TMRS invested $75 million in the firm's Varde Investment Partners Fund, an event-driven, distressed credit fund.
Trustees also approved commitment of a total of $353 million to three private equity funds.
H.I.G. Capital received an aggregate commitment of $300 million with $200 million earmarked for H.I.G. Strategic Partners Fund, which will invest in the firm's 12 underlying funds as they return to market over the next four years, and $100 million going to a companion co-investment vehicle, meeting materials showed.
The final private equity commitment was €45 million ($53 million) to CapVest Equity Partners Fund IV, middle-market buyout fund focused on investment in companies in consumer staples, health care and essential services in northern and western Europe.
The fund's manager, CapVest Partners, is new to TMRS.