Texas pension commits over $400m to private equity

The $17.7bn Texas County & District Retirement System has been active, including making a commitment to Khosla Ventures, a coup for a smaller system that would not traditionally have had access to a top-tier venture manager.

The Texas County & District Retirement System has committed $340 million to private equity firms this year, displaying a range of appetites for strategies like international buyouts, distressed investments and growth opportunities.

The pension, which has about $17.7 billion in assets, boosted its target allocation for private equity in March to 10 percent from 8 percent. The system has an estimated actual allocation as of 30 September of about 5.3 percent, according to the pension system’s web site. Texas County & District private equity portfolio is valued at about $885 million.

So far this year, the pension system has committed $35 million to Summit Partners Venture Capital Fund III-A, and $50 million to Summit Partners Growth Equity Fund VIII-A. The growth equity fund is targeting $3 billion, while the venture fund is targeting $500 million.

Texas County & District also committed $50 million to Oaktree European Principal Fund III, targeting €2.5 billion to €3 billion for European distressed debt investments; $40 million to KSL Capital Partners III, which closed on $2 billion in June, and Khosla Ventures IV, which closed on $1 billion in October.

The Khosla commitment is significant because public pension systems, especially smaller funds, have traditionally had a hard time getting access to top-tier venture managers. In recent years, the most popular venture firms have opened up more to allowing public systems, which require a higher level of disclosure than many venture managers have historically been comfortable with.

A private equity official from a large US public pension system told Private Equity International in a prior interview the timing was right for LPs to get access to the best venture managers in the market, many of whom may be facing fundraising challenges that have plagued the industry as a whole.

Texas County & District also bought into some European exposure, committing €30 million each to Chequers Capital XVI and Waterland Private Equity Fund V. Chequers closed its fund on €850 million in June, while Waterland raised €1.1 billion for its fifth fund.

The pension system also committed $5 million to LC Fund V, $20 million to H.I.G. Growth Buyouts & Equity Fund II, $40 million to Davidson Kempner Long-Term Distressed Opportunities Fund, $25 million to Berkshire Fund VIII and $40 million to Summit Partners Credit Fund.