KCERA commits $70m to TPG special sits vehicle

The Kern County Employees Retirement Association has approved a $70 million commitment to one of TPG's credit vehicles, Private Debt Investor has learned.

The pension plan hired TPG Sixth Street Partners (TSSP) for the private credit mandate, which will invest the commitment through its distressed and special situations co-investment vehicle TSSP Adjacent Opportunities Partners, Gloria Dominguez, executive director at KCERA, wrote in an email.

Dominguez declined to comment further on the commitment, while TPG was not immediately available to comment.

TSSP Adjacent Opportunities Partners co-invests with the firm’s global distressed and special situations TPG Opportunities III fund (TOF III), according to a filing with the US Securities and Exchange Commission. The TOF III fund held its final close on $3.37 billion, well above its $2.6 billion fundraising target, PDI data showed. Several public pensions have committed to this fund, including the New Jersey Division of Investment ($300 million), the Washington State Investment Board ($200 million), and the Pennsylvania Public School Employees' Retirement System ($150 million).

The fund, to which TPG made a 1 percent general partner commitment, charges a 1.5 percent management fee on committed capital and a 20 percent carried interest fee, according to documents from the New Jersey Division of Investment.

KCERA’s mandate to TSSP falls within its private credit bucket, which showed a return, net of fees, of 3.6 percent over the last quarter and a 7.5 percent return since last June, according to its latest portfolio performance review.

The current private credit allocation is still significantly under its 5 percent target, which the pension plan approved last July, simultaneously reducing its equity and commodity allocation targets. The asset class accounted for 0.8 percent, or roughly $31.5 million, of the pension plan’s total portfolio, which totaled $3.94 billion as of 30 June.

Verus, the consulting firm that conducts KCERA’s performance reports, had projected a 6.5 percent 10-year return on KCERA's private credit allocation in March.

The Bakersfield, California-based pension plan’s total fund showed a 2.9 percent net return over the second quarter; a 7.1 percent return the first half of the year; a 11.8 percent return the year ending 30 June; 7.7 percent over a five-year period; and 3.7 percent over a 10-year period.