Case | HBS Case Collection | April 2014 (Revised June 2014)

Texas Teachers and the New Texas Way

by Matthew Rhodes-Kropf, Luis M. Viceira, John Dionne and Nathaniel Burbank

Abstract

In 2011 Britt Harris, the Chief Investment Officer for the $107.4 billion Teachers Retirement System of Texas (TRS), was considering whether to pursue strategic partnerships with a group of large private equity firms. After spending four years aggressively moving the fifth largest pension fund in the United States into alternative asset classes, Harris felt that TRS shouldn't just participate in private equity funds as a typical limited partner. Rather, under his proposal TRS would offer carefully vetted firms multi-billion dollar investments through a customized fund structure that had fewer allocation mandates than traditional fund structures, and guarantees to reinvest 50% of any investment gains back into the investment vehicle. In exchange, Harris hoped to receive a highly customized compensation structure and gain greater access to investment professionals within the participating firms.

Keywords: Texas; TRS; Texas Teachers; Private Equity; Texas;

Citation:

Rhodes-Kropf, Matthew, Luis M. Viceira, John Dionne, and Nathaniel Burbank. "Texas Teachers and the New Texas Way." Harvard Business School Case 214-091, April 2014. (Revised June 2014.)