Alpha Edge Recognition: Alpha Generation - Private Equity Investing
This year, Allocator Intel is recognizing leaders in the allocator community, acknowledged by their peers, for exceptional leadership in the key areas of portfolio construction in the Alpha Edge Recognition Awards.
Scott Ramsower is nominated for Alpha Generation in Private Equity Investing. In about 14 years as Head of Private Equity Funds at the Teacher Retirement System of Texas, he has helped grow his team from six to 26 people and the overall portfolio from $7 billion to $33 billion in net asset value (“NAV”).
Scott grew up in Texas and attended Texas A&M University, where he received his Bachelor of Business Administration in finance from the Mays Business School. After college, Scott moved to New York, spending two years in consulting at PricewaterhouseCoopers before two years in equity research at Morgan Stanley, and then became a private equity LP joining AlpInvest Partners in their New York office. He joined the Teacher Retirement System of Texas (TRS) in 2010 at its headquarters in Austin.
The following is edited for length and clarity.
Can you share an overview of your own background and more about Texas Teachers mission?
Prior to joining Texas Teachers, I spent eight years working in the Northeast, in New York City, but I’m a native Texan, from Dallas originally. I met a Texan in New York, married her, and after eight years, we wanted to go home. I’ve been working at Texas Teachers’ ever since.
A high level on Texas Teachers: We have about $186 billion in NAV, making us the sixth-largest pension in the United States. We work on behalf of more than 2 million teachers. It’s a huge constituency base: About one out of 20 Texas is one of our members. My mom was a teacher, and I grew up in the Texas public school system, so it’s an honor to be able to serve those teachers that served me early in my life.
The average teacher makes around $45,000 a year, and the average retirement benefit is about $2,200 a month. Most of our members don’t receive Social Security, so this pension is extremely important to them. It’s an important mission that we have and one that we take very seriously.
Can you share an overview of what your portfolio looks like today?
Our private equity portfolio has an NAV of $33 billion and a total exposure of $45 billion. We have a target to represent 14% of the total TRS assets, and today we are about 17% to 18%. We have a team in Austin and a team in London and have about 60 to 70 core relationships on a global basis. We’re deploying about $3 billion to $4 billion a year into private equity, with 65% of that going into fund commitments, and 35% of that going into co-investments. We have a team of 26 private equity professionals today, which is a large team relative to our peers.
What are some of the challenges you anticipate over the next few years?
We’re looking to add quite a few new managers in the smaller end of the market. We’re going to be writing smaller checks, which is going to be more resource-intensive for our team to go out and find new managers, underwrite them, and then actively monitor them on an ongoing basis. It’s going to be a heavy lift, but we’ve built out our team to do it, and everyone is excited about the challenge.
What would you say is your office’s greatest accomplishment since you joined?
This one’s an easy one for me. When I joined, we had $7 billion in private equity NAV and six people, and now we have $33 billion in NAV and 26 people and growing.
That’s a team and portfolio that is over four times larger than when I joined 14 years ago – and through all of that growth, we continue to perform in the top quartile vs. our peers. We’re very proud of that.
What do you like to do outside of work?
I have three kids under the age of 11, so that keeps me very busy. Between my work, my travels and my family activities, my calendar is very full. My wife and I joke that we’re in the phase of our life where we’re just trying to survive, not thrive, but we make a great team and are loving it. We’re trying to soak up every minute, however, as I’m often reminded that kids grow up fast!
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