The board of the Texas Municipal Retirement System has made commitments totaling $500 million to four private equity funds and one infrastructure fund, as well as reallocating $200 million to an existing real estate fund, pension officials confirmed.
The fund manages a total of $27.5 billion in assets.
The largest private equity commitment was $100 million to FGN 2018 Partner Fund run by Foundry Group, a Bounder, Colorado, venture capital firm. Foundry manages close to $2.5 billion. Agenda material for the system’s Feb. 14-15 meeting says that Texas Municipal will co-invest $100 million in a separate account that will target high potential and access-constrained early-stage venture capital investments.
The other three private equity commitments are:
- A $50 million commitment to Reverence II, a buyout fund managed by Reverence Capital Partners. The agenda material says Reverence Capital is a New York-based investment firm founded in 2013 that focuses on the middle market. It invests in financial services companies, such as asset/wealth management bank and non-bank finance, payments and services, and insurance. The fund is targeting $750 million.
- A $50 million commitment to Arcline I, a buyout fund managed by Arcline Capital Partners in San Francisco. Agenda material says the fund focuses on acquiring middle-market industrial companies and transforming their business model. The fund is targeting $1.2 billion in the fund.
- A commitment of $50 million to PSG IV, the growth equity affiliate of Providence Equity Partners. Agenda material says the fund will target investments in lower middle-market software and technology-enabled businesses. The Providence, Rhode Island, based firm is targeting $1.75 billion in the fund.
The agenda material says Texas Municipal has a goal of making $525 million in private equity commitments in 2019. The pension system has private equity investments totaling $566 million as of Dec. 31. The system wants to increase its private equity investments to more than $2.2 billion in the next eight years as it builds its private markets portfolio, show presentations at the February 14-15 board meeting.
In the infrastructure arena, the board approved Texas Municipal’s commitment of $200 million to Harrison Street HSSI, a fund managed by Harrison Street, an investment management firm in Chicago with a focus on real estate storage facilities, education, and healthcare.
Agenda material shows the firm is now expanding into infrastructure investments. It says the fund will develop a portfolio of investments in social infrastructure, investing in the healthcare, education, government, and utility sectors. The fund will be part of Texas Municipal’s real return asset class, whose investments total $2.5 billion.
The board also approved a reallocation of $200 million to H/2 Partners, a real estate firm. The firm already invests the money for the pension system. Agenda material says the firm specializes in providing access to liquid private commercial real estate debt markets by participating in the origination and structuring process of securities and loans. It was unclear at press time as to how the reallocation differs from the original commitment.The real estate asset class totals $2.6 billion for the pension system.
Texas Teachers’ Closes Out Year with $1.8 Billion in New Commitments Across 12+ Strategies
Texas ERS Terminates Decade-Old Relationship with Investment Consultant
Britt Harris, Texas Endowment to Review Investments in ‘Scrutinized Entities’