Texas County assigns $351 million to alternatives funds

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…

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