Content area
Full Text
NEW YORK - The Teachers Insurance and Annuity Association is rapidly building a giant private equity program. In less than three years, the program's commitments have surged to $2.3 billion from virtually nothing.
Commitments are slated to grow to $3 billion but there is no target date
"We have been committing $750 million to $800 million a year since starting the program," said Shelley M. Zolar, director at TIAA's Private Equity Funds Group, New York. One-third of the commitments have been invested.
The TIAA program is broadly based, with commitments to 75 partnerships. Of those, 64% are in U.S. funds, 36% in non-U.S. funds.
"In the buyout area, our bias is toward midcap funds and smaller, although we have a few funds with a large-cap focus," Ms. Zolar said in an interview.
Underlying investments in very large-cap companies tend to be the most sophisticated and well-represented and therefore command the fullest price. "We feel that managers focusing elsewhere, such as midcap, have an opportunity to find better value. TIAA prefers to get a break on pricing and looks for funds whose managers are good at pricing things cheaply," Ms. Zolar said. Examples of investments in midcap funds include $12.5 million to HIG Capital Partners II LP; $15 million to ING Furman Selz II and $25 million to ING Furman Selz III; $14.4 million to Desai Private Equity Investments III; and $40 million to Desai Private Equity Investments IV.
Asset break,own
As of June 30, the sector breakdown of the program was: 32% in expansion capital, small-cap and midcap buyouts; 16% in larger midcap and large-cap buyouts; 10% in distressed and turnaround funds; 29% in venture capital; 9% in emerging markets; and 4% in project finance and energy.
Global funds also are important to...