TLDR:
- Focus on DPI (Distributed to Paid-In) ratio and shift to smaller market funds are key priorities for Texas Teachers’ PE chief.
- The pension fund wants to ensure it is backing the right partners while getting appropriate terms due to the slow pace of fundraising.
Texas Teachers’ PE chief is prioritizing a focus on the DPI (Distributed to Paid-In) ratio and a shift towards smaller market funds. The pension fund is taking its time to ensure it is backing the right partners while getting appropriate terms, due to the slow pace of fundraising. The DPI metric is used to measure the cash distributions made to limited partners relative to the capital invested. Texas Teachers is also looking to take advantage of the attractive pricing and greater potential for value creation in the smaller market space.
According to the PE chief, the fundraising pace is not expected to significantly pick up in 2024, so the pension fund will continue to carefully select partners and evaluate its options. The focus on DPI is important because it reflects the ability of general partners to generate cash returns for limited partners. Texas Teachers wants to ensure that its investments are generating strong returns and that it is able to distribute cash to its members.
The shift towards smaller market funds is driven by the belief that there is greater potential for value creation in this space. The smaller market segment is seen as less crowded than larger market funds and offers attractive pricing due to the lower competition. Texas Teachers’ PE chief believes that smaller market funds are better positioned to generate strong returns and create value for limited partners.
The pension fund will continue to evaluate its options and take its time to select the right partners. It wants to ensure that it is backing managers who have a proven track record of generating strong returns and creating value. Texas Teachers’ PE chief emphasizes the importance of conducting thorough due diligence and being patient in the fund selection process.
In conclusion, Texas Teachers’ PE chief is focused on the DPI ratio and a shift towards smaller market funds. The pension fund wants to ensure it is backing the right partners while getting appropriate terms due to the slow pace of fundraising. The focus on DPI reflects the pension fund’s goal of generating strong returns and distributing cash to its members. The shift towards smaller market funds is driven by the belief that this segment offers greater potential for value creation. Texas Teachers’ PE chief emphasizes the importance of careful evaluation and thorough due diligence in the fund selection process.
