Texas Pension Fund Invested $1.8B in Private Markets in 2024
The Texas County & District Retirement System (TCDRS) made $1.8 billion in private market commitments in 2024, with more than $400 million added to its private equity and credit strategies in December.
The private equity program comprised only approximately $730 million of the $50 billion pension fund’s portfolio, as credit strategies took over. According to the most recent TCDRS investment performance report, credit strategies saw a gain of more than 12%, while the private equity portfolio returned only 4.7% annualized through the end of September 2024.
The $1.8 billion distressed debt portfolio continues to be the most successful credit strategy, with an annualized return of approximately 13% as of the conclusion of the third quarter.
Arbour Lane Credit Opportunities Fund IV received $175 million in December, bringing the total in the distressed debt portfolio for 2024 to $300 million. The most recent Arbour Lane fund, which is aiming to raise $2 billion, will continue to concentrate on overlooked mid-cap distressed bank debt in secondary markets.
Other distressed debt funds chosen were Monarch Capital Partners VI in October and the Silver Point Select Overflow Fund in November.
The TCDRS board allocated $400 million to direct lending strategies in 2024, which continue to be the largest portion of the private credit program at the pension fund, with more than $7 billion.
A $100 million allocation was made to Crescent Direct Lending Levered Fund IV (Delaware) LP. The strategy tends to focus on the middle-market space. The move marked TCDRS’ second allocation to Crescent Capital Group in 2024.
Three private equity firms were chosen in December, with a commitment of approximately $142 million, including European exposure.
Adelis Equity Partners Fund IV received a €50 million ($52 million) allocation. Adelis, which is headquartered in Stockholm, invests in middle-market companies that operate in at least one of the Nordic countries and generate revenues ranging from €10 million to €300 million.
GTCR’s GTCR Strategic Growth Fund II was allocated $60 million. The buyout fund invests in financial services and technology, healthcare, business and consumer services, and technology, media, and telecommunications (TMT).
Finally, TCDRS allocated $30 million to TCG Labs Opportunity I, a follow-on fund established by The Column Group that supports later-stage investments in its biotech portfolio companies. The pledge follows the pension fund’s $10 million investment in TCG Labs Fund I in February.