The Louisville Courier-Journal, citing comments from state Treasurer Jonathan Miller, reported that the KTRS board made the move toward VC investments at a meeting earlier this month. Miller is a KTRS board member.
Abramson unveiled his venture capital strategy in early May, suggesting that the KTRS and the Kentucky Retirement Systems (KRS) the state’s largest pension funds allocate 2% to 3% of their portfolios to venture investments. The two funds control about $25 billion, which could mean up to $750 million available for venture capital spending (See Louisville Mayor Wants State Pension Funds in VC Firms ).
“It’s not going to be done right away … we need to assess when is the right time to enter this investment,” Miller told the newspaper. “But ultimately, we all think that this is a wonderful idea to help out with growing businesses and growing the economy in Kentucky.”
Miller acknowledged that any money spent on venture investing by the Kentucky pension funds could go to out-of-state equity firms, but said, “It’s exciting to me as state treasurer that some of the investment could have some good benefits on the economy of Kentucky.”
Unlike the KTRS, the KRS board was quick on the trigger to oppose Abramson, issuing a statement a week after his proposal opposing any legislative requirement that the pension fund earmark money to venture capital.
The trustees “will vigorously defend against any attempt to circumvent the board’s sovereignty in performing its fiduciary duties, including its obligation to act for the exclusive benefit of its members and beneficiaries,” the statement read in part (See Bluegrass Pensions Resist VC Push).
The KRS is responsible for the investment of funds and administration of benefits for over 200,000 Kentucky state and local government employees. These employees include state employees, state police officers, city and county employees, as well as nonteaching staff of local school boards and regional universities.
Supporters of Abramson’s plan say Kentucky law encourages such institutional investing. In his May speech to the Venture Club of Louisville, Abramson said pension funds in at least 20 states already make venture investments of some kind.
Bob Leggett, chief investment officer of Kentucky Retirement Systems, said the fund diversified its investment strategy two years ago when it added four investment categories to its portfolio.
The fund has since committed $40 million to venture investments and deployed $1.6 million into a California venture capital fund in April, Leggett said. It has not invested any money with Kentucky venture funds.
Abramson spokesman Chad Carlton said a venture capital presentation to the Kentucky Retirement Systems’ board is planned for early fall.