TIAA-CREF Raising Distressed Fund of Funds

TIAA-CREF, long one of the most prolific investors in buyout funds, is raising around $400 million for a first-time fund of funds targeting distressed debt and equity funds, sister magazine Buyouts has learned from two sources familiar with the new fund.

The New York-based limited partner would join a growing cadre of distressed fund of funds managers, including Drum Capital Management, Siguler Guff & Co., and MB Global Partners, a new outfit founded by Sigular Guff veteran Maria Boyazny.

The sources declined to provide or were unfamiliar with the exact name of the fund or where it is in the fundraising process, though one said that the fundraise is in the “late innings.” It’s also unclear who is managing the fund, which presumably would be housed in the company’s alternative investments group.

TIAA-CREF, which manages $426 billion of retirement money for people in the academic, medical, cultural and research fields, has become a major investor in private equity funds in recent years, investing around $1.5 billion to $2 billion annually in the asset class.

The alternative investments group has been reorganizing this year following the departure around May of Sheryl Schwartz, who had spearheaded the company’s foray into private equity investing after joining in 1988. Schwartz has since joined Perseus LLC, the Washington, D.C.-based merchant bank and private equity fund management company, as a senior managing director working on mezzanine debt, private equity investments and investor relations.

In the past, TIAA-CREF has backed funds managed by The Blackstone Group, The Carlyle Group, Cerberus Capital Management and TPG, among others.

Executives at TIAA-CREF declined to comment.