Rhode Island pension selling Wellspring, Summit LP stakes over gun-related holdings

The commission, which oversees Rhode Island’s $7.6 billion pension system, will now begin the process of divesting from United Sporting Companies, a holding company for Ellett Brothers LLC and Jerry’s Sport Center Inc, both distributors of firearms.

Currently run by General Treasurer Gina Raimondo, Rhode Island’s public pension funds have committed $20 million to Wellspring Capital Partners IV, which holds a stake in United Sporting Companies. Rhode Island plans to pursue a secondary sale of its Wellspring IV stake, according to a spokeswoman for the state.

Rhode Island’s consultant, Cliffwater, will seek pricing for the sale. A spokesperson for Wellspring Capital Management, manager of the fund, declined to comment.

The state’s investment commission also voted to allow Cliffwater and the Treasury’s investment division to begin a process to divest its interest in Summit Partners, which has also drawn a $20 million commitment from the pension system.

A spokeswoman for Summit Partners said the firm has an interest in United Sporting Companies through its credit affiliate, Summit Partners Credit Advisors. “As a lender, our credit affiliate doesn’t hold a board seat and doesn’t hold a management role,” the spokeswoman for Summit Partners said.

The votes by the state investment commission mark the latest step in a process that began with public statements by Rhode Island pension officials shortly after the shooting deaths of 20 children and six adults at Sandy Hook Elementary School on Dec. 14, 2012, in Newtown, Conn.

Wellspring Capital Partners IV, a vintage 2004 domestic buyout fund, turned in an internal rate of return of 8 percent as of Dec. 31, 2012, according to data from the Oregon Public Employees Retirement Fund. Oregon committed $80 million to Wellspring Capital Partners IV and reported a investment multiple of 1.4x. The Regents of the University of California committed $30 million to the same fund.

In other repercussions from the shootings, Cerberus Capital Management LP has said it would sell its controlling interest in the Freedom Group, the gun company that owns Bushmaster, the military-style weapon used in the Newtown slayings. A spokesperson for Cerberus told Buyouts the sale process continues. Limited partners in Cerberus including the University of California have requested the move by Cerberus.