Texas Teachers targets Asia growth with proposed Singapore office

Asia accounts for approximately 15% of Texas Teachers’ $153 billion in assets under management, giving it a slightly larger share of the portfolio than Europe. The pension fund identified Singapore as a preferred foothold in the region last year and is now waiting on board approval to move ahead.

Texas Teachers established a London base in 2015 having discovered that substantial potential deal flow was being overlooked. CIO Jerry Albright credits the move with adding $75 million to the bottom line. Even though transaction volume has since slowed, he noted that “having ears on the ground there was instrumental” from a risk assessment perspective amidst Brexit-linked volatility.

While the goal is to replicate what has been achieved in London, Albright told a recent investment committee meeting that they should not expect strong deal flow in the short term.

“I don’t think it will be as easy where we’re going to, but where we’re going to is where all the activity of growth in the world is and all that activity of growth leads to returns for Texas Teachers. Yes, we are looking for direct access, but it probably won’t be right away. It will take some time to understand the dynamics, understand the culture, and understand who we are doing business with over there,” he said.

They would start with a team of four professionals who would source private investments, enhance Asian public investing and securities trading, and manage relationships and risks within the region. Early evaluation indicated that it could save about $300,000 a year just by having a public markets trader based in Singapore.

“This demonstrates our commitment to the market, our commitment to being the preferred destination – or the partner of choice – and [enables us] to build our brand and build our competitive advantage around direct deal flow,” Albright added.

As of March, Texas Teachers had $152.5 billion in assets, of which $21.9 billion was committed to private equity, $20.1 billion to real estate, and $8.7 billion to energy and natural resources. It has interests in Asia-focused private equity funds managed by the likes of TPG Capital, Baring Private Equity Asia, CVC Capital Partners, and Orchid Asia.

Texas Teachers is also known for establishing strategic partnerships with select managers. In 2012, it signed up KKR and Apollo Global Management to manage assets across private equity, real assets, and credit. Commitments to these programs totaled $8 billion as of August 2018. A further $3 billion was allocated to a tactical opportunities vertical established in 2015.

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• Topics
• LPs
• Fundraising
• Asia
• Teachers Retirement System of Texas
• Singapore