Tennessee approves $150m in first ever PE commitments

The $27bn pension chose TA Associates, Hellman & Friedman and Khosla Ventures to receive its debut private equity commitments.

Tennessee Consolidated Retirement System, a $27 billion US public pension, has made its first commitments under its newly formed private equity programme to TA Associates, Hellman & Friedman and Khosla Ventures.

The investments were made over the last few months, though the pension only disclosed them publicly Tuesday. 

Tennessee committed $75 million to Hellman & Friedman Capital Partners VII, which is targeting $10 billion and has collected at least $6 billion. It committed $50 million to TA Associates Fund XI, which closed on $4 billion earlier this month. And it also committed $25 million to Khosla Ventures III, which is targeting $750 million.

Tennessee has been building its private equity programme since receiving state government approval last year to invest up to 3 percent in the asset class. The pension’s target allocation is 3 percent, with a hard cap of 5 percent.

In February, the pension snagged Lamar Villere from the Teachers’ Retirement System of Illinois to run its private equity programme.

Tennessee’s aims to invest about $800 million in private equity over the next five to six years, Villere said in an interview. The pension’s investment advisor is Strategic Investment Solutions.

Tennessee chose to move into private equity investing because of the “attractive risk-adjusted returns” and “diversification benefits”, Villere said. Tennessee has not delayed or second-guessed its decision to move into private equity by the economy downturn, Villere said.