ERS of Texas Eyes Co-Investment Push, European Managers

The Employees Retirement System of Texas used a joint board meeting on May 19 to detail strong long-term results from its $7.3B private equity program while signaling a push to expand co-investments and add European manager relationships. The program posted a 12.6% annualized return over five years and 12.2% over 10 years, outperforming its benchmark by 170 and 190 basis points over those periods. Buyout co-investments have been the primary driver, generating a five-year IRR of 33% compared to 15% for primary fund investments; the program currently allocates roughly 27% of the book to co-investments, with staff signaling plans to push that figure higher. Annual commitments are stepping up to approximately $970M in fiscal year 2026, and staff flagged plans to add one or two European middle to lower middle market managers over the coming year. 

In other allocator activity, the Vermont Pension Investment Commission is looking to increase its commitment to HarbourVest Dover Street XII by $25M, bringing its total to $70M, after a higher annual pacing budget created additional capacity for the already-approved manager. Separately, Publica, the Swiss Federal Pension Fund, is reportedly seeking managers for two direct lending mandates totaling up to $1.1B — a first allocation to the strategy for the fund — split between European mid-market and US direct lending, with mandates targeted to start in the first half of next year.

On the fundraising side, Eurazeo's Elevate team reached a first close of Eurazeo PME V at over €1B in commitments, with the European lower mid-market fund already more than 10% deployed through two seed investments. IDG Capital is reportedly seeking to raise approximately $2B for a new China-focused growth fund targeting sovereign wealth funds, family offices, and endowments outside China, with a first close targeted before year-end. Elsewhere, Pentagreen Capital reached a second close of its Green Investments Partnership at $800M.

Zooming out, a structural shift in insurance portfolios is worth noting. According to Clearwater's latest Insurance Investment Outsourcing Report, private credit's share of insurance outsourced AUM has grown from 10% to 16% over the past five years — a 2.4x increase — with 20% year-over-year growth in the most recent period. Total third-party general account AUM across participating managers reached $5.5T in 2025, up 23% year-over-year, with private equity and real assets managers among the fastest-growing entrants as insurer allocations to alternatives expand across all insurer sizes.

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