KKR will manage $3 billion in capital from the Teacher Retirement System of Texas “across a variety of private markets’ asset classes,” the fund announced Monday. In a separate statement, the pension also announced it would invest $3 billion with private manager Apollo.
KKR Selected as Strategic Partner by Teacher Retirement System of Texas
NEW YORK, Nov 07, 2011Kohlberg Kravis Roberts & Co. L.P. (together with its affiliates, “KKR”), today announced that the Teacher Retirement System of Texas (“TRS”) has selected KKR to be a strategic partner with the responsibility of managing $3 billion of TRS’ capital across a variety of private markets’ asset classes. The implementation of the strategic partnership between TRS and KKR is subject to the negotiation of definitive documentation and receipt of any requisite approvals.
The KKR strategic partnership with Texas Teachers includes a flexible, discretionary arrangement encompassing $3 billion of long term capital committed in 2011 ($1 billion to date) and beyond. Importantly, it has meaningful recycling provisions for those commitments and provides wide latitude for the opportunistic allocation of capital in different market environments. It takes advantage of the long-term nature of the TRS portfolio to capitalize on market opportunities globally and is designed to deliver an attractive risk reward profile to TRS in a widely diversified, global portfolio. It is a customized incentive-based arrangement which seeks to allow the portfolio to capitalize on the best ideas of KKR. The partnership also emphasizes significant idea sharing between the staff at Texas Teachers and the KKR team around the world.
Commenting on the partnership, Henry Kravis and George Roberts, Co-founders and Co-CEOs of KKR, said: “We appreciate the innovative and market-leading approach of TRS, and we are very excited about this strategic partnership. It reflects the deepening of a longstanding relationship between TRS and KKR, and we look forward to working with the TRS team in the years ahead.”
“Today’s decision is the culmination of a multiple year effort to create a private markets partnership platform that will support the needs of TRS and its beneficiaries. Over the last three years, we have implemented similar partnerships in public markets, and they have been very successful,” said Steve LeBlanc, Senior Managing Director, External Private Markets at TRS. “These strategic partnerships enable us to work closely with a small group of top tier managers and they allow us to take advantage of the best global investment opportunities. We selected KKR because the firm has a long history of successful investing and it has demonstrated the type of innovative thinking that will ensure we have access to the right opportunities at the right time,” LeBlanc continued.
TRS delivers retirement and related benefits authorized by the Texas Legislature, and manages a more than $107 billion trust fund established to finance member benefits. More than 1.3 million public education and higher education employees and retirees participate in the system
Founded in 1976 and led by Henry Kravis and George Roberts, KKR is a leading global investment firm with $58.7 billion in assets under management as of September 30, 2011. With offices around the world, KKR manages assets through a variety of investment funds and accounts covering multiple asset classes. KKR seeks to create value by bringing operational expertise to its portfolio companies and through active oversight and monitoring of its investments. KKR complements its investment expertise and strengthens interactions with investors through its client relationships and capital markets platform. KKR is publicly traded on the New York Stock Exchange KKR -1.41% . For additional information, please visit KKR’s website at www.kkr.com .
Apollo Global Management Announces Long-Term Strategic Partnership with Teacher Retirement System of Texas
NEW YORK, Nov 07, 2011) — Apollo Global Management, LLC APO +3.25% and its consolidated subsidiaries (collectively “Apollo”), today announced that it has been selected by Teacher Retirement System of Texas (“TRS”) to participate in a long-term strategic partnership. Through the partnership, Apollo expects to manage $3 billion in commitments from TRS among various fund and customized investment programs across its integrated platform. Apollo believes this type of partnership will allow it to capitalize on the firm’s diverse investment skills to deliver strong returns for TRS while managing risk. The implementation of the strategic partnership between TRS and Apollo is subject to the negotiation of definitive documentation and receipt of any requisite approvals.
The elements of the strategic partnership include: $3 billion of long-term committed capital for new funds and investment strategies; significant recycle provisions for the commitments; discretionary deployment of the capital within agreed upon product baskets; customized fee and priority return provisions to recognize that the capital will be deployed across numerous product categories over an extended period; considerable risk mitigation for TRS as investments across multiple product categories will be made through a single partnership; and significant collaboration between Apollo’s investment teams and the Private Markets staff at TRS.
“This strategic partnership marks a new milestone in our successful long-term relationship with Apollo,” said Steve LeBlanc, a senior managing director of TRS. “We believe this customized framework will allow the Trust to take advantage of opportunities across a variety of investment strategies and market conditions. We look forward to continuing to work with Apollo and their best-in-class investment team to further enhance returns for our members.”
“We are pleased that TRS has selected us as its partner in this new program and believe this strategic partnership represents the further development of our business with respect to creating a select number of customized accounts that are highly synergistic with our fund structures,” said Leon Black, Chairman and Chief Executive Officer of Apollo. “We value the commitments of each of our investors and strive to manage every one of our funds and customized investment products to deliver best-in-class risk-adjusted returns to all of our partners.”
Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Mumbai and Hong Kong. Apollo had assets under management of more than $65 billion as of September 30, 2011, in private equity, credit-oriented capital markets and real estate funds invested across a core group of nine industries where Apollo has considerable knowledge and resources. For more information about Apollo, please visit www.agm.com .
TRS delivers retirement and related benefits authorized by the Texas Legislature, and manages a more than $107 billion trust fund established to finance member benefits. More than 1.3 million public education and higher education employees and retirees participate in the system.
SOURCE: Apollo Global Management, LLC