TCRS PE commitments hit $349 Million
with decision on Bessemer Venture Partners

By Milt Capps Updated 3:35 p.m.

TCRS PE commitments hit $349 Millionwith decision on Bessemer Venture Partners | TCRS, Lamar Villere, TNInvestco, venture capital, private equity, Tennessee Consolidated Retirement System, investment, Doug Overbey, Charles Sargent, legislation, state government, General Assembly

Updated 3:35 p.m.: Sen. Overbey told VNC he withdrew his proposal after hearing concerns from agency staff members and intends to resume exploring the matter, this Summer. The original story follows.

Private equity fund commitments by Tennessee Consolidated Retirement System (TCRS) now total $349.3 million, according to Lamar Villere, TCRS director of private equity.

About $50 million of commitments have thus far been invested, said Villere. The commitment total rose $25 million with a recent decision by the TCRS trustees' investment committee to commit $25 million to management by Bessemer Venture Partners VIII Institutional LP. The entity for the TCRS investment, known as TrueBridge/TCRS-BVP VIII Special Purpose LLC, is managed by TrueBridge Capital Partners.

Bessemer recently closed a $1.6 billion fund, after being oversubscribed with about $2.5 billion in intended commitments, according to a New York Times report. Bessemer is focused on early-stage companies and is globally oriented, with some emphasis on India investments, said The Times.

L. Villere

TCRS has about $32.1 billion in assets and is allowed by Tennessee law to invest up to 5 percent of total assets in private equity. TCRS currently maintains a self-determined target of committing 3 percent of total assets toward PE. That would total nearly $1 billion in commitments; in moving toward that goal, TCRS maintains an annual commitment target of $275 million per year, though actual yearly commitments may vary above or below that target, Villere told VNC.

The TrueBridge-linked commitment is the first announced for the TCRS' private-equity program in about nine months.

News of the latest transaction comes two weeks after Tennessee House and Senate sponsors withdrew bills that would have directed TCRS to "to authorize a preference for investing in venture capital and private equity funds that are Tennessee-based or having presence in this state, to the extent deemed prudent and financially sound," according to a summary of HB1262 and SB0918 online. Villere declined comment on the matter.


The bills' sponsors were State Rep. Charles Sargent (R-Franklin) and Sen. Doug Overbey (R-Maryville), both of whom were also instrumental in passage of Tennessee's TNInvestco legislation in 2009. VNC has thus far been unable to obtain comments from the legislation's sponsors. This story will be updated, if warranted.

In June 2010, TCRS announced a $25 million commitment to VenRock; in May 2010, TCRS announced $80 million had been split evenly between OakTree Opportunities Funds VIII and VIII-B.

Prior to that, TCRS commitment announcements came in March 2010 and in November and August of 2009. Those earlier commitments engaged Hellman & Friedman Capital Partners VII LP, San Francisco; TA XI of Boston; Khosla Venture III of Menlo Park; and, Draper Fisher Jurvetson Fund X LP, Menlo Park.

The largest single commitment was among the initial batch announced, a $75 million commitment to Hellman & Friedman. The TA XI commitment ultimately was for $44.3 million, less than the $50 million authorized by the investment committee and originally announced by TCRS, Villere said. Cambridge Associates represented TCRS in the commitment announced this week.

News of Tennessee's first-ever authorization to broaden TCRS alternative investments to include private equity broke in August 2008, when VNC reported the legislature's authorization for the program had gone unnoticed by the state's investment community and was ramping-up.

As VNC subsequently reported, in-state VC/PE houses were concerned that as a practical matter they'd be too small to compete with the bigger out-of-state houses. Months after Villere's hire in 2009, TCRS PE investment guidelines were issued.

TCRS' broader portfolio, the agency points out in its 2010 annual report, is "diversified among domestic and international stocks and bonds, real estate, private equity and short-term securities." VNC