Nov. 23 (Bloomberg) -- Teacher Retirement System of Texas, the seventh-largest U.S. public pension fund, will invest $200 million in private equity in Asia, whose economies are leading the world out of a recession.

The Austin, Texas-based fund has assigned $100 million each to Squadron Capital and Morgan Creek Capital Management LLC to help it invest with private-equity firms that focus on emerging Asian economies such as China, spokesman Howard Goldman said in an e-mailed response to questions.

Stock markets in Asia have outperformed the global average this year as China’s and India’s economies rebounded, allowing buyout firms managed by TPG Inc. and Goldman Sachs Group Inc. to profit by selling private-equity investments.

“Asia will continue to be a growth story and the late entrants will still be able to enjoy that growth,” said Vincent Pun, a principal at Diversus Investment Advisers Pty Ltd., which advises private equity and hedge funds. “It makes sense for Teacher Retirement to invest through funds-of-funds in Asia because they have people on the ground and experience investing in the region.”

The California Public Employees’ Retirement System, the biggest U.S. pension plan; second-ranked California State Teachers’ Retirement System; and Canada Pension Plan Investment Board, the country’s second-biggest public-pension manager, have made investments in private equity firms in Asia, Pun said.

New Gold Fund

Teacher Retirement, manager of more than $83 billion for almost 1.3 million public education employees and retirees, last month started a $250 million gold fund investing in precious- metals mining stocks and exchange-traded funds, according to its Web site.

Morgan Creek Capital, based in Chapel Hill, North Carolina, manages $9 billion for institutions and wealthy clients. Squadron Capital is a Hong Kong-based private equity investment firm that manages more than $1 billion of assets.

Private-equity managers, which use debt to fund acquisitions, announced a record $1.58 trillion of transactions worldwide from 2005 to 2007, before the credit contraction stalled takeovers and halted sales of companies the firms had prepared for divestment, according to Bloomberg data.

The MSCI Asia Pacific Index has advanced 31 percent this year, beating gains in the Standard & Poor’s 500 Index and the MSCI World Index. The increase has helped drive a recovery for buyout firms in the region.

Investment Rebound

Private-equity investments in Asia have reached $25 billion since July, overtaking the $22.4 billion total for the first half, according to the Asian Venture Capital Journal.

Newbridge Capital LLC, the Asia unit of Texas-based TPG, in June raised $1.68 billion selling its stake in Shenzhen Development Bank Co. to Ping An Insurance (Group) Co. Goldman Sachs agreed to sell almost half of its 11 percent stake in Shuanghui Group, China’s biggest meat processor, for about $150 million, a person with knowledge of the matter said this month.

The Asian Development Bank in September raised its economic growth forecast for the region on strengthening expansion in China, India and Indonesia, after Asian policy makers cut interest rates to unprecedented lows and governments announced more than $950 billion of stimulus measures.

To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net

Last Updated: November 22, 2009 23:30 EST