The Texas Municipal Retirement System (TMRS) has approved roughly $378.75 million in private equity commitments in 2016, while its advisor has recommended an additional $50 million commitment, board meeting materials presented on 8-9 December show.
The roughly $429 million total surpasses just two-thirds of the $600 million target TMSR staff had recommended in December 2015.
PEI data indicates that TMRS originally intended to allocate $150 million per quarter throughout 2016. But in the first quarter, TMRS approved just $75 million to Blackstone’s GSO Capital Opportunities Fund, which is a $6.5 billion debt fund, the data shows.
The Austin-based pension then approved $185 million to four managers in the second quarter; $100 million to four managers in the third; and a $18.75 million co-investment to Blackstone’s GSO Co-Investment Fund III, which launched this year, in addition to the $50 million recommendation to an additional manager, according to the board meeting materials.
Fund managers that TMRS committed to in 2016 include Providence Strategic Growth II, a $640 million fund; natural resources-focused Orion Mine Finance Fund II, which raised $310 million; Kainos Capital Partners II, an $895 million fund; FTV V, an $850 million fund; and Incline Equity Partners IV, a $100 million fund.
After establishing its private equity programme in 2014, TMRS’ allocation to the asset class stood at 0.4 percent as of 30 September, short of its 5 percent target, according to the latest investment report presented at the 8-9 December meeting. This was up slightly from the 0.3 percent allocation marked at the end of the previous quarter, on 30 June.
The board meeting material also indicated that TMRS had considered 103 buyout managers and selected one at the end of the process, marking a 5 percent selection rate. Buyout took the smallest slice of the pie for TMRS’ private equity allocation divided by strategy, with special situations taking 39 percent, growth 32 percent and buyout 29 percent.
Overall, TMRS has private equity exposure through 14 different managers, of which TPG and GSO each received the largest commitment at 10.7 percent of the entire TMRS commitments.
TMRS worked with StepStone to select private equity fund managers after hiring the advisor in July 2015, according to TMRS’ fourth quarter 2015 investment report.
TMRS declined to comment beyond the meeting materials. StepStone was unavailable to comment.