Secondaries outperform primaries for Texas

Austin-based Employees Retirement System of Texas counts Industry Ventures, Lexington, LGT and Southern Cross among its secondaries fund managers.

Private equity secondaries funds have generated stronger returns for the Employees Retirement System of Texas than primary funds, according to director of private equity Wesley Gipson.

The returns from secondaries funds are “very favourable given the youth of most of ERS’ primary commitments”, Gipson said. “Our secondaries funds’ IRRs range from 17 percent to 58 percent.”

ERS also expects to commit to a secondaries fund in the near-term, according to Gipson.

Last year, ERS committed $40 million to Industry Ventures Secondary VII and $48 million to Industry Ventures Special Opportunities Fund II, which held respective final closes last year on $425 million and $200 million. Other secondaries funds in its portfolio include LGT Crown Global Secondaries II and III and Lexington Capital Partners VII, according to ERS documents.

ERS allocates 7.8 percent of its assets to private equity, but has a 10 percent long-term allocation, according to its website. The system has $26.1 billion of assets.


This story has been updated to remove Southern Cross Group as a secondary fund manager in ERS’ portfolio.