The Texas County & District Retirement System (TCDRS) in Austin rounded out its credit and private equity investment portfolios with over $400 million in commitments in the final weeks of 2024.
The $50 billion pension fund made $1.8 billion in private market commitments last year, with private equity accounting for only approximately $730 million of that figure as credit strategies took center stage. The private equity portfolio returned only 4.7% annualized through the end of September 2024, while credit strategies gained over 12%, according to the most recent TCDRS investment performance report.
Distressed debt performs
The $1.8 billion distressed debt portfolio remains a top performer among all credit strategies, hovering near 13% annualized at the end of the third quarter.
In December, the fund rounded out its annual allocations to the asset class to $300 million with a $175 million commitment to Arbour Lane Credit Opportunities Fund IV. The latest Arbour Lane fund, which is targeting $2 billion, will maintain the series’ focus on overlooked mid-cap distressed bank debt in secondary markets. The strategy emphasizes senior secured debt and first-lien securities in out-of-favor sectors, particularly targeting bank loans and mid-size structures where competition remains thin — a niche the firm has cultivated since its 2016 founding.
Other distressed debt funds selected by TCDRS this year were Monarch Capital Partners VI in October and the Silver Point Select Overflow Fund in November.
U.S.-focused direct lending remains popular
Throughout 2024, the TCDRS board committed $400 million to direct lending strategies, which at over $7 billion remain the largest slice of the private credit pie at the Austin pension.
TCDRS allocated $100 million to Crescent Direct Lending Levered Fund IV (Delaware) LP. The strategy tends to focus on the middle-market space. The move marked TCDRS’ second allocation to Crescent Capital Group in 2024.
Private equity contains global commitments
With $731 in new capital allocated to private equity funds in 2024, TCDRS has sought to maintain European exposure as well. Likely to finish the year with lower returns than in 2023, the $13 billion investment portfolio made commitments to 15 funds throughout the year.
In December, three funds were selected with commitments totaling roughly $142 million.
A €50 million ($52 million) allocation was made to Adelis Equity Partners Fund IV. Stockholm-based Adelis invests in middle-market companies that have revenues of €10 million to €300 million and have operations in at least one of the Nordic countries.
GTCR received a $60 million commitment to its GTCR Strategic Growth Fund II. The U.S.-focused buyout fund invests across four sectors: Business and consumer services, financial services and technology, healthcare, and technology, media, and telecommunications (TMT).
Lastly, TCDRS committed $30 million to TCG Labs Opportunity I, a follow-on fund from San Francisco-based The Column Group that backs later-stage investments in its biotechnology portfolio companies. The commitment follows TCDRS’ $10 million investment in TCG Labs Fund I in February.
The final TCDRS moves of 2024 leave the pension fund poised to maintain its diversified approach across private markets in the new year. Distressed debt is emerging as a standout performer as direct lending continues to anchor the credit portfolio, and while private equity returns have lagged, the pension fund’s strategic mix of U.S., European and sector-specific commitments reflects a long-term view on the asset class.
