Case | HBS Case Collection | October 2012

Altoona State Investment Board: July 2012

by Josh Lerner and Nathaniel Burbank

Abstract

Considers the decision faced by state pension fund manager Rod Calhoun as he decides whether to invest $200 million in Bain Capital's eleventh global buyout fund: Bain Capital Fund XI. For the fund, Bain was offering its limited partners a choice between three different fee structures: first, a "conventional" fee structure of a 1.5% management fee with 20% carried interest and a 7% preferred rate of return; second, a 1% management fee with 30% carried interest and a 7% preferred rate of return; or third, a 0.5% management fee, 30% carried interest, and a 0% preferred rate of return. Should Calhoun invest in Bain? If he should, which fee structure should Calhoun choose?

Keywords: private equity; leveraged buyouts; management fees; Bain Capital; Venture Capital; Private Equity; Leveraged Buyouts; Banking Industry; Boston;

Citation:

Lerner, Josh, and Nathaniel Burbank. "Altoona State Investment Board: July 2012." Harvard Business School Case 813-100, October 2012.