Kentucky makes $50m commitment to FoF Bay Hills

The $11.5bn Kentucky Retirement System will move forward with its private equity allocation of 12% despite the declining value of the pension's portfolio.

The Kentucky Retirement System has committed $50 million to Bay Hills Capital emerging managers’ plan, with the potential for another $50 million in 2010.

The $11.5 billion pension, which has a nearly 12 percent allocation to private equity, will “stand pat” on its commitment to private equity, despite seeing its assets plunge from $19.3 billion as of 30 June 2008.

“We’ll remain active in the space and if we need to make a change, we’ll cross that bridge,” Adam Tosh, the pension’s chief investment officer, said in an interview.

Bay Hills, formed in 2006, is a lower- to mid-market fund of funds based in San Francisco that focuses on fund investing, co-investments and secondaries. Bay Hills has worked with firms Marlin Equity Partners and Accel KKR, among others. Bay Hills’ LPs include university endowments, trusts and high-net-worth individuals.

Bay Hills was co-founded by managing directors Lance Mansbridge and Thomas Cusick. Mansbridge spent more than six years as the senior private equity consultant for Strategic Investment Solutions, an institutional investor consultant based in San Francisco. Cusick was managing director at CIBC Capital Partners, the investment arm of CIBC World Markets.

Kentucky made a $75 million commitment to Bay Hills emerging managers programme in 2007.

The pension is on the lookout for investment opportunities in the market and has explored distressed funds and secondaries. Tosh said he has not yet seen steep enough discounts in the secondaries market.

“We won’t do anything until we see better discounts,” Tosh said. “We haven’t seen a lot of things that justify the prices yet.”