Several US pension funds are preparing to significantly increase their allocations to private credit in the 2025 fiscal year, highlighting a growing interest in the sector among institutional investors, according to a report by Banking Exchange.
During a board meeting on 21 August, the Employees Retirement System of Texas announced plans to allocate between $1nm and $1.8bn to private capital markets in the upcoming financial year. The $39.1bn pension fund will focus on asset-backed, direct lending, and distressed debt strategies. This investment will be split between an additional commitment to an existing fund and a new fund that mirrors the strategy of another within their private credit portfolio.
Similarly, the Teachers Retirement System of Louisiana has approved up to $1.2bn in increased allocations to private credit for 2025. The $27bn pension fund plans to invest between $600m and $800m in distressed and subordinated debt, and an additional $200m to $400m in direct lending.
As part of these efforts, the fund’s private markets manager recommended specific investments, including $160m in ICG Europe Fund IX by Intermediate Capital Group, $100m in the Summit Partners Growth Equity Fund, and $100m in the THL Equity Fund X managed by Thomas H Lee Partners. Earlier this year, the fund had already committed $225m to private credit, with $100m allocated to Comvest Credit Partners VII and $125 million to Castlelake Asset-Based Private Credit.
Additionally, the Fire and Police Pension Association of Colorado has revealed $30m in private equity commitments, including $25m to the Peak Rock Capital Fund IV and $5m to the Transom Mahogany Co-Invest.
