TRS Kicks Off Big PE Year With $400M In Pledges to CS

The $81 billion Teacher Retirement System of Texas (TRS) recently unveiled two pledges totaling $400 million for a pair of captive accounts managed by Credit Suisse’s Customized Fund Investment Group. The latest commitments, however, represent a small part of the roughly $2.5 billion the pension fund intends to commit to private equity in 2009.

The limited partner pledged $300 million to the Credit Suisse CFIG Middle Market Buyout Program, a captive fund of funds designed to provide additional exposure to existing and new middle-market firms that cannot accept its normal pledge size of roughly $100 million and up. It also made a $100 million commitment to the Credit Suisse Re-Up Bridge Program, also a captive fund of funds, to gain exposure to managers no longer deemed emerging and thus not relevant to the LP’s $550 million emerging manager program, which is also run by Credit Suisse. This program is also designed to accommodate managers who cannot receive a direct investment from TRS of $100 million or more.

The LP’s target allocation to private equity is 10 percent, with a range of 5 percent to 15 percent. As of December 2008, the actual allocation to private equity was 7.9 percent, giving the LP plenty of room to make further commitments to the asset class, including a total of about $2.5 billion this year. TRS anticipates allocating this capital across large-cap and mid-market buyout funds, as well as venture and distressed strategy groups.

In an October interview with Buyouts, CIO Britt Harris said its exposure to U.S.-based buyout funds, which compose between 75 percent to 80 percent of the private equity portfolio, could shrink a little as the program grows and the investment division looks to boost commitments to growth equity investors overseas. But he added that TRS has no plans to dramatically reduce its exposure to U.S.-based general partners.

In November, TRS hired Steve LeBlanc as senior managing director of private markets, overseeing the real assets, private equity and principle investments portfolios. LeBlanc previously served as president and CEO of Summit Properties Inc., a Charlotte, N.C.-based real estate investment trust, or REIT, acquired by Camden Property Trust, a Houston-based REIT, in February 2005. The LP’s investment consultants are Hamilton Lane for domestic private equity and Altius Associates for international private equity.