Searches and Hires

Texas Employees commits $120 million to private equity, begins opportunistic credit buildout

Texas Employees Retirement System, Austin, committed a total of $120 million to three private equity funds in March, a transaction report showed.

The private equity team of the $26.9 billion pension fund committed $100 million to Crown Secondaries Special Opportunities II, managed by LGT Capital Partners. The pension fund previously committed $100 million to the first fund in the manager's series. Portfolio managers of the special situations funds seek to acquire private equity stakes on global secondary markets.

The defined benefit plan also committed $10 million each to private equity co-investment funds CO20190304 and CO20190306. As a matter of policy, the pension fund does not identify managers of its co-investments.

In other actions, ERS' board of trustees approved a tactical plan for the pension fund's newest asset class, opportunistic credit, during a March 6 meeting.

The new allocation, which has a 3% target weighting — about $800 million in current dollars — will be jointly managed by the system's hedge fund, real estate and external global credit teams.

Strategies in the new portfolio are direct lending, mezzanine debt, distressed and special situations, real estate credit, specialty finance and structured credit.

The tactical plan for 2019 calls for commitments to up to two strategies with a total of $270 million, a board report showed.

The timeline for the full buildout of the credit portfolio depends on the opportunities that arise, spokeswoman Mary Jane Wardlow said in an email.

Areas of initial focus are specialty finance, real estate credit and cross-asset portfolios with the flexibility to invest across various private credit strategies, the board report said.

The pension fund will not issue RFPs for credit managers, Ms. Wardlow added.