Texas Teachers commits $200m to two Asian funds of funds

Squadron Capital and Morgan Creek Capital Management Asia are to help the US pension fund to invest in Asia-focused private equity firms.

The $71 billion Teacher Retirement System of Texas (TRS) has committed $100 million each to Asian fund of funds manager Squadron Capital and investment advisor and manager Morgan Creek Capital Management Asia, sources close to the firms told sister site PEI Asia.

Squadron Capital and Morgan Creek did not respond to requests for comment while TRS was unavailable for comment at time of press.

Presently, Squadron Capital is in the market for Squadron Asia Pacific Fund II, its second fund of funds vehicle, which is targeting commitments of $400 million. The fund is expected to close soon, a source noted.

Morgan Creek is currently raising Morgan Creek Capital Partners Asia, which aims to close in the third quarter of 2010 and has a hard cap of $400 million. TRS's commitment has helped it achieve a first close on $100 million, a second source said. The fund of funds will invest in growth capital, buyout, energy and natural resources and real estate funds primarily in China and India. It will also invest in Asia Pacific and Southeast Asia.  

TRS currently allocates about $4 billion or 5.8 percent of its assets to private equity. In 2007, it made a big push into the asset class by approving a long-term target allocation to private equity of 10 percent. In November 2008, TRS appointed former Summit Steve LeBlanc to lead its real assets and private equity portfolio.

While the pension fund invests globally, not more than 30 percent of its private equity portfolio may be investments outside of the US as of August 2009, according to private equity database PE Connect.