Pension System: Florida State Board of Administration
Assets Managed (Main Pension): $132 Billion (Feb. 2013)
Private Equity Assets: $6.6 Billion
Private Equity Allocation/Target: 5%/5%
Chief Investment Officer: Ash Williams
The Florida State Board of Administration, which manages $163 billion in retirement and emergency funds, committed $665 million across four private equity-related strategies, including buyouts, venture capital, mezzanine and distressed real estate debt, according to John Kuczwanski, a board spokesman. All four commitments were made from Florida’s main $132 billion pension fund.
The largest of the four commitments during the quarter went to the latest fund from Levine Leichtman Capital Partners, Levine Leichtman Capital Partners V LP, a mid-market private equity fund that has a $1.5 billion target. In the last few months, the fund has picked up commitments from several public pensions, including $25 million from the Dallas Police & Fire Pension System, $20 million from the Arkansas Teacher Retirement System, and $15 million from the San Antonio Fire & Police Pension Fund.
Florida’s $200 million to Levine Leichtman’s Fund V is by far the biggest pledge to date and is likely to take up more than 10 percent of the fund’s overall assets. The firm’s attorney, Steven Hartman, declined to comment on the fund or the firm.
Florida’s interest in Levine Leichtman no doubt stems in part from the strong results of the firm’s previous fund, the 2008-vintage Fund IV. According to September 2012 return data from the California Public Employees’ Retirement System, Levine Leichtman’s Fund IV has so far returned a net IRR of 26 percent and a net return multiple of 1.5x. CalPERS pledged $75 million to that fund. Florida also pledged $100 million to Fund IV. Founded in 1984 by Arthur Levine and Lauren Leichtman, the Beverly-Hills based firm is known for making investments in such firms as the Jon Douglas Real Estate Group and Quizno’s, the sandwich franchiser.
Florida’s second big commitment was $190 million to TowerBrook Capital Partners’s latest fund, the TowerBrook Investors IV LP, which closed in February with $3.5 billion in commitments, well ahead of the fund’s $3 billion target.
Other investors in TowerBrook Capital’s latest fund include the Washington State Investment Board, which pledged $300 million, the Massachusetts Pension Reserves Investment Management Board, which committed $100 million, the New Mexico State Investment Council, which committed $75 million, the Indiana Public Retirement System, which pledged $60 million, the Kansas Public Employees’ Retirement System, which pledged $50 million, the Arizona Public Safety Personnel Retirement System, which committed $45 million, and the San Francisco Employees’ Retirement System, which committed $30 million.
TowerBrook Capital’s previous success is one of the main reasons for the fund’s strong showing. According to September 2012 return data from CalPERS, the previous fund, the 2008-vintage Fund III, has returned a net IRR of 17 percent along with a net return multiple of 1.3x. CalPERS committed $300 million to Fund III, but the pension so far has not yet re-upped with Fund IV.
London and New York-based TowerBrook Capital was famous for investing in Jimmy Choo, the women’s shoe brand, selling it in 2011. The firm also once owned a stake in the St. Louis Blues ice hockey franchise.
Florida also committed $150 million to Bayview Opportunity Master Fund III LP, a distressed real estate debt fund run by Coral Gables, Fla.-based Bayview Asset Management. The fund is a successor to Bayview Fund II, to which Florida committed $100 million. That fund has so far delivered a 19 percent return, according to Florida data.
Finally, Florida pledged $125 million to the SVB Strategic Investors VI LP, a venture capital fund of funds run by Silicon Valley Bank Asset Management.
Florida’s main pension fund, the Florida Retirement System, had $6.6 billion, or 5 percent, of its assets in invested private equity capital as of February 2013. That does not include the $6.3 billion, or 4.8 percent, invested in “strategic investments,” a category that includes private debt and mezzanine funds.