The Teacher Retirement System of Texas is betting on the future of the leveraged loan market, anchoring a new investment fund platform managed by CIFC.
The fund platform, called Texas Debt Capital, will be able to purchase up to $2 billion in loans in the U.S. and Europe. An announcement released Monday said that TRS “committed significant equity” to the fund, but did not disclose exact numbers.
The fund will invest in senior secured loans, including those issued by TRS’s private equity investment partners, according to the announcement. The investors will use term and non-mark-to-market leverage to improve returns. This strategy includes issuing collateralized loan obligations, as well.
TRS, which managed $193.1 billion in assets as of June 30, is a prolific private asset investor. The pension fund also has a long track record of creating strategic partnerships with investment managers, including collaborations with KKR and Apollo Global Management that date back to 2011.
A spokesperson for TRS said the relationship between CIFC and TRS is a new one.
“TRS is already one of the nation’s top private equity investors, [so] the creation of this platform to invest in sponsored loans represents an exciting strategic innovation for [us],” TRS chief investment officer Jase Auby said. “We are pleased to leverage CIFC’s track record as a best-in-class alternative credit manager to gain long-term exposure to this attractive total return.”
An affiliate of CIFC Asset Management — a credit specialist with more than $33 billion under management — will act as the fund’s general partner and manager.
“We are honored that TRS selected CIFC for this innovative mandate and are excited for the opportunity to develop a unique partnership,” said Steve Vaccaro, chief executive officer and chief investment officer at CIFC.