Texas Employees Retirement System, Austin, provided a seed investment in Phase 2 Partners, a newly launched long/short equity hedge fund manager.
Phase 2 said in a news release that the firm has attracted close to $150 million from "multiple investors, including a strategic partnership" with Texas ERS and PAAMCO Launchpad, a subsidiary of hedge funds-of-funds manager PAAMCO Prisma.
Texas ERS is sourcing the investment in Phase 2 from the system's $150 million emerging hedge fund manager program.
Mary Jane Wardlow, a spokeswoman for the $30 billion pension fund, confirmed the investment in an email and said that ERS doesn't "comment on specific details regarding investment size or terms" of investments it makes in external managers.
The system's total allocation to hedge funds was 4.3% or about $1.3 billion as of Nov. 30, the most recent date available. ERS hired PAAMCO Prisma in 2018 to provide the company's LaunchPad for use by ERS investment officers as an emerging hedge fund manager investment platform.
Phase 2 is the second emerging hedge fund manager to receive a seed investment from the Texas fund. In 2019, Cinctive Capital Management received an undisclosed investment.
"It is hard to find a cohesive team with a significant and attractive track record, one that managed capital during the (global financial crisis) and the current (COVID-19) pandemic," said CIO Charles Thomas "Tom" Tull in the release.
Phase 2 portfolio managers will focus on investment in financial companies mostly in the U.S. and Europe, the news release said.
Phase 2 was founded by Justin Hughes, partner and portfolio manager, and Rachel Clarke, partner, chief operating officer and chief compliance officer. Both were co-founders of Philadelphia Financial Management and are spinning Phase 2 out of their former firm as an independent money manager, the release said.
A call placed to Philadelphia Financial Management for information about the team's departure was not returned.
