Texas Employees to chop allocation in 2010

The $18.4bn pension will reduce its private equity exposure by $400m compared to fiscal 2009.

The Employees’ Retirement System of Texas, which has about $18.4 billion in assets, is reducing its target for private equity investing in fiscal 2010 by about $400 million from the previous year.

The pension’s board this week approved a target allocation to private equity of $600 million in fiscal 2010, which begins on 1 September. That’s $400 million lower than the target allocation for fiscal 2009, which was about $1 billion. Texas Employees’ anticipates actually allocating about $950 million to private equity in fiscal 2009 to 12 funds.

Texas’ lower commitment for fiscal year 2010 does not affect the pension’s long-term allocation to private equity, which stands at 8 percent. Texas Employees’ expects to reach long-term allocation percentage in 2015, two years earlier than it had forecasted.

The pension anticipates investing with 14 funds in fiscal 2010 in sectors including buyouts, distressed debt and secondaries.

The decision to lower the commitment level for fiscal 2010 stemmed from the beating the pension has taken in the market downturn of the past year. The pension dropped from a value of about $24 billion last year to where it stands as of 30 June at $18.4 billion, according to a spokesperson.

Through fiscal 2009, the pension has invested with across various sectors and strategies. The pension committed $37.5 million to Brazos Equity Fund III, $65 million to Wind Point Partners VII, $110.4 million to CVC European Equity Partners V, $100 million to Hellman & Friedman Capital Partners VII and $100 million to Riverside Capital Appreciation Fund V.

Texas Employees’ also committed $50 million to TA SDF III, $100 million to TA XI, $60 million to Navis Asia Fund VI and $74.4 million to Charterhouse Capital Partners IX.

Also, the firm earlier this month committed $100 million to Lexington Capital Partners seventh fund.