Louisiana Teachers’ makes $80m mezzanine bet

The pension, with about $13bn in assets, has invested $40m in mezzanine funds managed by Merit and Peninsula. The pension came under its spending goal for private equity in fiscal ‘09.

The Louisiana Teachers’ Retirement System has invested $40 million a piece in mezzanine funds Merit Capital Partners V and Peninsula Capital Partners V.

Merit V is targeting $600 million for mezzanine investments. Merit’s prior fund closed on $455 million in 2004. It is not clear how much Peninsula is targeting.

The pension, with about $15 billion in assets, has a specific target allocation to debt-related investments of 8 percent, with an actual allocation of about 4.5 percent, according to Philip Griffith, Louisiana TRS’ chief investment officer.

Louisiana Teachers’ debt portion is one part of its overall private markets bucket, which has a target range of 28 percent. The private markets segment includes straight private equity and real estate. The pension has a target allocation of 10 percent to private equity.

Louisiana did not reach its $1 billion goal for private equity commitments in fiscal 2009, which for the pension ended 30 June. The pension spent about $750 million on private equity in fiscal 2009, Griffith said.

Over the year, Louisiana Teachers made several commitments to debt funds, including funds managed by Oak Hill Advisors, Apollo Global Management and Intermediate Capital Group. The pension also made a $100 million commitment to First Reserve’s twelfth fund, which closed on $9 billion in April.

For 2010, Louisiana wants to commit between $1 billion to $1.2 billion on private equity investments, Griffith said.

The pension also invests in real estate and is looking for a possible investment in an infrastructure fund. The pension has not yet received an investment recommendation from its advisor, Hamilton Lane, for an infrastructure fund.