Tennessee commits $50m to Denham(3)

The $31bn retirement system is in the process of developing its private equity portfolio, with only 0.2% of its assets committed to the strategy on a 3% target.

The Tennessee Consolidated Retirement System has committed up to $50 million to Denham Capital Fund VI, the $31 billion pension system announced in a statement. Advisor Cambridge Associates represented Tennessee on the commitment.

Tennessee maintains a relatively small private equity portfolio, having only received approval from the state’s General Assembly to invest in the asset class in 2008. The retirement system is nowhere near its 3 percent target allocation, with only 0.2 percent of its total assets committed to private equity as of 30 June, according to state documents.

The retirement system has also set target allocations for investment strategies within the asset class; with a 45 percent target for buyouts; a 25 percent target for credit funds; 20 percent for venture funds and 10 percent for secondaries funds. Tennessee’s strategy also calls for around 45 percent of its private equity portfolio to be allocated to non-US managers. 

Tennessee made several small commitments last year totaling at least $140 million. Commitments went to Bessemer Venture Partners VII, Berkshire Fund VIII and Khosla Ventures IV, according to state documents.

Denham, which is expected to close its sixth fund at some point in the first quarter, is targeting $2.5 billion for investments in the energy and commodities sectors. Denham held a first close on the fund in October and had collected $1.7 billion. The fund is already “over-subscribed”, said a person with knowledge of the process. The next close on Fund VI is scheduled for February, which could be the final close, according to a source.