Wednesday, January 30, 2019

City Will Not Invest Pension Money In Epicenter Fund

Posted By on Wed, Jan 30, 2019 at 12:38 PM

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A city official confirmed Wednesday that Memphis will not invest a portion of its pension money into a local nonprofit’s investment fund.

Dan Springer, deputy director of media affairs for the city, told the Flyer Wednesday that the city’s pension investment committee won’t consider the proposal from the nonprofit Epicenter.

Epicenter asked the city in December to allocate $10 million of its $2.4 billion pension fund to a pool of money used to invest in entrepreneurs here.

The ask was an attempt by Epicenter to reach its immediate goal of aiding 1,000 entrepreneurs, including 500 new firms by 2025 and its ultimate goal of raising $100 million to fuel a 10-year strategy generating resources in and access to capital, talent, local customers, and technology commercialization.

Epicenter has already managed to raise $40 million for its investment fund, thanks in part to an initial $10 million grant from FedEx Corp.

Looking to grow the fund, Epicenter asked both city and county officials for $10 million from each of their pension funds late last year. The city’s Atlanta-based pension consultant, Segal Marco Advisors, did a preliminary assessment and recommended earlier this month that the city not invest the money into Epicenter’s fund.

In a letter to the city earlier this month, the consultant agency’s vice president Rosemary Guillette said the nonprofit doesn’t meet the city’s rules requiring that money be handled by organizations with a low turnover of personnel, capacity to undertake the fund’s accounts, expertise with similar funds, “demonstrable financial stability,” and a “competitive record of performance.”

Guillette also said that per city rules and strict guidelines around investments with the pension fund, the city’s pension fund can only be “invested for the exclusive benefit of the plan participants and solely in their interest.”

“Our preliminary assessment is that the Epicenter Fund does not meet either of the guidelines listed above and does not meet the fiduciary standards of care needed for a pension fund investment,” Guillette said. “Therefore, Segal Marco Advisors cannot recommend this investment opportunity for the pension fund.”

For this reason, Springer said the point is “moot.” The city suggested in a Facebook post last week that the pension investment committee will have the final decision on whether or not to invest in Epicenter’s fund.

However, Springer confirmed Wednesday that the city’s chief financial officer, Shirley Ford, who heads the committee, will not bring the proposal before the body and that the city will not move forward with the proposal.

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