LP Radar: A curious appointment

The appointment of Robert ‘Bo’ Ramsey to replace Bob Clone as chief of private equity at Indiana Public Retirement System raises yet more questions about what’s going on with its private equity programme – questions that the pension fund seems disappointingly reluctant to answer

Robert “Bo” Ramsey was named director of private equity at the $26 billion Indiana Public Retirement System in December – less than a year after joining the pension fund.

Ramsey joined in April 2012 as a senior investment analyst on the private equity team. Previously, he had worked for software company iasta as an associate general counsel, and before that he was with law firm Ice Miller working on private equity deals. He was admitted to the Indiana bar in 2008, according to state documents. That’s a rapid rise, and it’s taken many in the industry by surprise.

Still, it’s only the latest in a series of surprising events at the fund. The Indiana Public Retirement System was only created in 2011, after the state decided to combine all of its state pension funds into one unified institution. At the helm as director of private equity was Bob Clone, who had more than 20 years of public pension investment experience: he worked as senior portfolio manager for the State of Michigan Retirement System from 1999 to 2010, managing more than $11.5 billion in private equity commitments, according to his LinkedIn profile.

Late last year, however, Clone left the system (in October, according to LinkedIn, though there was no official word). It’s unclear why he left, and Indiana is so far refusing to answer questions about the situation. But several LPs who know Clone told me they were surprised by his departure, which one characterised as “abrupt”.

Generally, the people who run private equity portfolios at public pensions have more than a few years' experience behind them.

What’s even stranger is that before he left, Clone was supervising a huge secondary sale, as part of an effort to “clean up” Indiana’s portfolio. So it had hired UBS to help sell about $220 million worth of LP stakes, and Greenhill & Company to run a sales process for more than $600 million of private equity interests.

However, Indiana halted this processes after Clone’s departure – again, for reasons that the system has not explained publicly. Sources in the secondary market expressed frustration in the weeks after the sales were pulled – not only because their due diligence work was going to waste, but also because they didn’t have a good sense of exactly what had happened.

And now there’s Ramsey’s promotion.

Generally, the people who run private equity portfolios at public pensions have more than a few years’ experience behind them. Usually, top programmes are run by highly respected professionals who have been on the job long enough to have seen the changes the industry has gone through, and who have deep knowledge of the managers and funds likely to contend for their capital.

On the face of it, Ramsey doesn’t seem to have that kind of experience. Significantly, those who weren’t around in the pre-Lehman days may not have a strong sense of which GPs were riding the wave of easy credit at the height of the bubble, and who came crashing down when the bubble popped. That’s an important perspective to have in a crowded fundraising market where every manager is claiming top performance and operational excellence.

And while this wouldn’t matter so much for an investment analyst working under an experienced veteran of the

Robert 'Bo'

industry – as Ramsey was under Clone – it matters a heck of a lot when that person is running the show. Add to this some of the major changes the system’s private equity programme is currently going through – not least the secondary sale and the combining of the portfolios – and you have a role that would be incredibly challenging even for a hardened professional. So it will be very tough for Ramsey.

Of course, it may be that Ramsey was clearly the best possible person for the job, with a skill set perfectly suited for the myriad issues Indiana faces; it may be that the system saw something in his performance that convinced them he would have no trouble running the programme.

But unfortunately, we just don’t know. And that highlights one of the key problems here: if Indiana was more open about its decision-making, a lot of these seemingly intriguing mysteries might seem far more mundane.

It goes without saying that a public retirement system managing public money should be as open and transparent as possible – and this just hasn’t been the case with some of these issues in Indiana.

So in the absence of any better information, all we can do is cross our fingers and hope that the pension fund knows what it’s doing. Surely the pensioners of Indiana deserve better than that?