The architect of the “Texas Way”, Steve LeBlanc, private markets chief at the Teachers’ Retirement System of Texas, has decided to head for the private sector. LeBlanc, a highly regarded limited partner, is only the most recent in a long and growing list of top LPs leaving their perches at the US’ largest public institutions.
It’s not clear where LeBlanc is headed; he will continue in his role until June to help facilitate transitional planning, the pension system said. In terms of a replacement, the pension system's investment management division will consider options and develop proposed organisational changes that will be discussed at the next board meeting, set for 19-20 April, a spokesperson said.
“A vision without execution is just a hallucination,” LeBlanc told Private Equity International in an exclusive interview last year, describing the “Texas Way” of investing. That investment process included compiling a “premier list” of private equity, real estate and real assets fund managers the pension system had pre-scrutinised and pre-certified as being top quartile, to whom the bulk of the system’s private markets capital would be allocated.
A vision without execution is just a hallucination.
“We’ve established those relationships already, and we don’t have to go through this every time we look at a different investment,” he said at the time, talking about what he dubs the “Kabuki dance” of GPs trying to tell LPs how smart they are, and LPs challenging GPs to prove it.
LeBlanc joined the pension system four years ago as the head of the private markets team that has since invested about $30 billion in 116 investments around the world. LeBlanc joined as the system was starting to significantly increase its exposure to alternatives, boosting private equity’s allocation target to 12 percent and the real assets target to 15 percent, the annual report said.
LeBlanc also led the formation of an innovative partnership with Kohlberg Kravis Roberts and Apollo Global Management. Under the plan, the system will commit $3 billion each to the firms for investments across asset classes. The strategic partnership was the first in what is considered to be a trend among large institutions. In fact, New Jersey’s state pension system followed up Texas’ move by forming its own customised relationship with The Blackstone Group.
Today, Texas Teachers’ has become one of the most influential LPs in the market not only because of
its swift commitment pace but also from its work on the formation of the Institutional Limited Partner Association principles, a set of guidelines meant to better align the interests of LPs and GPs.
“Steve also helped the private markets community into an improved long-term alignment through collaboration with [ILPA’s] recently formed key principles – something that will serve our members’ interests,” Brian Guthrie, Texas Teachers' executive director, said in a statement.
Texas Teachers was chosen by industry professionals as the LP of the year in North America for 2011 in Private Equity International’s annual private equity awards.
LeBlanc’s decision comes after another major LP, Christine Pastore, co-head of alternative investments at the New Jersey Division of Investments, decided to step down from her role. Last year, several long-time private equity leaders at US pension systems left their positions, including Jim Treanor, the head of private equity at Florida’s state pension, and Wayne Smith, head of private equity at the Massachusetts Pension Reserves Investment Management Board.