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Texas County assigns $351 million to alternatives funds

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Texas County & District Retirement System, Austin, committed a total of $351 million to five alternative investment funds managed by four existing managers, a transaction report from the $43.9 billion system showed.

Investment officers earmarked $250 million from the system’s $4.8 billion direct-lending portfolio with the largest allocation — $150 million — going to Redwood Enhanced Income Corp., managed by Redwood Capital Management. The fund’s portfolio managers will seek stressed and distressed investment opportunities.

The remaining $100 million was committed to Atalaya Asset Income Fund Evergreen, managed by Atalaya Capital Management. The firm originates and opportunistically purchases credit and asset-based investments.

Texas County’s actual allocation to direct lending was 11% as of Dec. 31, with a 16% target.

With the addition of the commitments to Redwood Capital and Atalaya Capital, the system committed a total of $750 million managed in five funds by five direct-lending specialists year-to-date April 1, the system’s 2022 transaction report showed. In 2021, the pension fund’s investment team committed a total of $1.6 billion to 16 direct-lending strategies run by 13 firms, a transaction report for that year showed.

From the system’s $10.7 billion private equity/venture capital portfolio, investment officers committed a total of $101 million to two existing firms, with $85 million going to Water Street Healthcare Partners V, a buyout fund.

TCDRS investment officers also directed additional commitments of $11 million and $5 million, respectively, to venture capital funds Shine Capital II and Shine Capital Opportunities Fund I.

In February, the system committed an initial $38 million to Shine Capital II and $19 million to Shine Capital’s opportunistic fund, the system’s 2022 transaction report showed.

The system’s actual allocation to private equity/venture capital as of Dec. 31 was 24.4% of plan assets, just shy of the system’s 25% target.

Year-to-date April 15, the system committed a total of $975 million to 16 private equity and venture capital funds managed by 11 money managers, including the additional Shine Capital and Water Street commitments, the 2022 transaction list showed.

In 2021, TCDRS committed a total of $4.6 billion to private equity and venture capital funds to 33 strategies managed by 26 managers, the system’s 2021 transaction report showed.