Tennessee Consolidated Retirement System, Nashville, can increase its target private equity allocation to 10% from 5% under legislation signed by Tennessee Gov. Bill Haslam.
The law also expands the types of private equity investments the $31.3 billion retirement system can make to include strategic lending, but only through Dec. 31, 2017. Previously, Tennessee Consolidated could invest only in domestic and international venture capital, corporate buyouts, mezzanine and distressed debt, special situations and secondary funds.
Michael Brakebill, chief investment officer, said in a telephone interview that strategic lending is intended to consume the extra 5% allocation.
“What we're doing there is basically any kind of non-investment-grade lending strategies. That's what that is intended to do, whether it's bank loans or mezzanine or high yield or some distressed strategies,” Mr. Brakebill said.
The retirement system's investment committee, along with investment consultant Strategic Investment Solutions, recommended the additional allocations. Mr. Haslam signed the bill May 10.
SIS and staff are currently conducting an asset-liability study, and the new law allows them to take the additional target and strategic lending provision to the retirement system's board. The final recommendations will be given to the board in September.
Separately, Mr. Brakebill said SIS and staff will also likely propose new allocations to emerging markets equities, and opportunistic and value-added real estate.
