Weekly News Clips, November 21, 2019

www.prb.texas.gov

TEXAS PENSION PLANS

Texas County & District Commits $60 Million to Private Equity November 19, 2019, By Christine Williamson

Texas County & District Retirement System, Austin, committed $60 million to a fund offered by Cortec Group, a new private equity manager for the $32.1 billion , a transaction report showed.

Investment officers made the commitment to Cortec Group Fund VII from the pension fund's $5.1 billion private equity portfolio.

Cortec portfolio managers will seek control in lower-middle-market North American companies in sectors such as health-care products and services; business-to-consumer and business- to-business; and value-added distribution, including e-commerce.

With the addition of the commitment to the Cortec fund, TCDRS has committed a total of $1.6 billion to 25 private equity and funds managed by 24 managers year-to-date Nov. 14.

In calendar year 2018, pension fund officials committed or invested a total of $1.4 billion to 22 funds run by 19 private equity and venture capital firms, transaction reports showed.

Pensions & Investments

Texas Teachers to Co-Invest $400m Alongside Brookfield, GIP Mega-Funds November 20, 2019, By Jon Peterson

Teacher Retirement System (TRS) of Texas has readied $400m (€361m) of capital to co-invest alongside the latest infrastructure mega-funds of Brookfield Asset Management and Global Infrastructure Partners (GIP).

The pension fund confirmed to IPE Real Assets that it plans to co-invest $300m alongside Brookfield Infrastructure Fund IV and $100m alongside Global Infrastructure Partners IV.

TRS Texas is effectively doubling its exposure, having already committed the same amounts, respectively, to the two vehicles.

Brookfield and GIP are each seeking to raise $20bn for their funds, according to Preqin.

IP&E Real Assets

1

TEXAS ECONOMIC INDICATORS

Texas Unemployment Remains Low as Job Growth Accelerates Slightly in October November 15, 2019, By Dom DiFurio

Texas unemployment held at historic lows in October as job growth accelerated slightly over the previous year to add 30,100 jobs, according to data released Friday by the Texas Workforce Commission.

For the fifth consecutive month, statewide unemployment remained at a historic low of 3.4%. Texas employers have added 297,100 jobs so far this year.

The low jobless rate is indicative of a continued tightness in statewide labor markets, according to Federal Reserve Bank of Dallas assistant economist Christopher Slijk.

The Dallas Morning News

Texas’ Economic Growth More Than Double the Nation’s, Data Shows November 18, 2019, By Brad Johnson

The Bureau of Economic Analysis (BEA) released its second-quarter GDP growth rate findings. Texas topped the list of all 50 states at 4.7 percent growth. However, that increase from the first quarter of this year to the second is 0.6 percent less than from the fourth quarter of 2018 to the first quarter of 2019.

The biggest contributor to the increase was the oil and gas industry which grew 1.83 percent — significantly outpacing other industries. Texas’ oil and gas industry has slowed down a bit after years of record growth in both crude oil and natural gas.

The Texan

Houston’s Economy Might Not Be as Hot as It Looks — And Still Needs Oil November 19, 2019, By Erin Douglas

The Houston region’s economic growth might not be as strong as reported and seems likely to slow next year as the petrochemical expansion winds down and oil prices remain modest, according to a new forecast from the University of Houston.

Energy companies spent billions of dollars to build and expand chemical plants along the Houston Ship Channel to process cheap natural gas from Texas shale fields into plastics and other petrochemicals in recent years, creating thousands of construction and manufacturing jobs, said the forecast’s author, the economist Bill Gilmer, director of the Institute for Regional Forecasting at the UH’s Bauer College of Business. With the sector largely built out, the Houston area’s growth next year will depend primarily on oil prices and national economy, both of which have shown signs of weakening.

Houston Chronicle

2

NATIONAL PENSION, INVESTMENTS & LEGAL

Investor Trends: US Pension Funds Get Their Houses in Order November 2019, By Stephanie Schwartz-Driver

US public pension funds are some of the largest institutional real estate investors in the world, and so they are some of the most keenly monitored.

“The big US investors are only getting bigger,” says Alok Gaur, global head of the client capital group at LaSalle Management. “They command such a substantial market share that other investors inevitably watch what they do.”

US investors have one of the largest, most liquid real estate markets on their doorstep and they have a long history of investing in the asset class. It is not surprising then to see that, while they might not have the highest target allocations to real estate, they tend to be the most fully invested among global investors.

IP&E Real Assets

Bill to Consolidate Illinois Public Safety Pension Funds Passes Legislature November 14, 2019, By Karen Pierog

A bill to consolidate hundreds of local public safety worker retirement systems in Illinois to ease funding pressures on municipalities won final approval in the state legislature on Thursday.

Ballooning pension liabilities for some cities in the nation’s sixth most populous state have led to budget cuts, tax increases, asset sales and credit rating downgrades.

The measure consolidates about 650 police and firefighter pension funds into two statewide funds in an effort to reduce administrative costs and boost investment returns. It passed the Senate in a 42-12 vote, following the House’s 96-14 vote on Wednesday.

Reuters

Rhode Island Supreme Court Allows City to Cut Pension Benefits to Avoid Bankruptcy November 18, 2019, By Marc E. Fitch

The Rhode Island Supreme Court has upheld a Superior Court decision to allow the City of Cranston to cut cost of living adjustments for city retirees, citing the city’s dire fiscal problems.

In 2011, Cranston faced a $256 million unfunded pension liability and the city’s pension system was only 16.9 percent funded as the city faced high unemployment and a $1 billion decrease in property values, according to the court decision.

Yankee Institute

The information contained in the PRB Weekly Clips is for informational purposes only and does not represent the views, positions or opinions of the Texas Pension Review Board. 3