Texas Teachers commits to Apollo, KKR

The pension beat its benchmark with an 8.4 percent return in 2014

The Texas Teacher Retirement System has approved two new private equity commitments to Apollo Global Management and KKR, according to recently released meeting documents.

Each firm will get an additional $1 billion for investments under the original strategic partnership agreements, which were entered into in early 2012. The investments will go for equity, real estate, debt and opportunistic strategies.

According to the pension, since inception, the aggregate TRS Private Strategic Partnership and related investments have produced aggregate results exceeding 15 percent per year.

The TRS Board of Trustees also approved a second resolution which allocated an additional $1 billion to each firm for investment in an emerging set of tactical opportunities. As a result, TRS now operates two separate Strategic Partner investment strategies with both Apollo and KKR.

TRS ended 2014 with a market value of $129.9 billion and an investment return of 8.5 percent, slightly beating its policy index by four basis points. Its consultant, Aon Hewitt, also noted that the Trust’s overall investment strategy has been below the average risk level of other funds.

TRS recently released a new strategic plan for 2015, focused on increasing investments in energy. The pension cited the potential value of newly distressed opportunities in the sector at its recent February meeting.