The architect of the “Texas Way,” Steve LeBlanc, private markets chief at the Teachers’ Retirement System of Texas, has decided to head for the private sector. LeBlanc, a highly regarded limited partner, is only the most recent in a long and growing list of top LPs leaving their perches at the US’ largest public institutions.
It’s not clear where LeBlanc is headed; he will continue in his role until June to help facilitate transitional planning, the pension system said. In terms of a replacement, the pension system's investment management division will consider options and develop proposed organisational changes that will be discussed at the next board meeting, which is set for 19-20 April, a spokesperson said.
“A vision without execution is just a hallucination,” LeBlanc told PERE in an exclusive interview last year, describing the “Texas Way” of investing. That investment process included compiling a “premier list” of private equity, real estate and real assets fund managers the pension system had pre-scrutinised and pre-certified as being top quartile, to whom the bulk of the system’s private markets capital would be allocated.
“We’ve established those relationships already, and we don’t have to go through this every time we look at a different investment,” LeBlanc said at the time, talking about what he dubs the “Kabuki dance” of GPs trying to tell LPs how smart they are, and LPs challenging GPs to prove it.
LeBlanc joined the pension system four years ago as the head of the private markets team that has since invested about $20 billion in 90 investments around the world. LeBlanc joined as the system was starting to significantly increase its exposure to alternatives, boosting private equity’s allocation target to 12 percent.
LeBlanc also led the formation of an innovative partnership with Kohlberg Kravis Roberts and Apollo Global Management. Under the plan, the system will commit $3 billion each to the firms for investments across asset classes. The strategic partnership was the first in what is considered to be a trend among large institutions. In fact, New Jersey’s state pension system followed up Texas’ move by forming its own customised relationship with The Blackstone Group.
Today, Texas Teachers has become one of the most influential LPs in the market not only because of its swift commitment pace but also from its work on the formation of the Institutional Limited Partner Association (ILPA) principles, a set of guidelines meant to better align the interests of LPs and GPs.
“Steve also helped the private markets community into an improved long-term alignment through collaboration with [ILPA’s] recently formed key principles – something that will serve our members’ interests,” Brian Guthrie, Texas Teachers' executive director, said in a statement.
LeBlanc’s decision comes after another major LP, Christine Pastore, co-head of alternative investments at the New Jersey Division of Investments, decided to step down from her role.