Florida Pledges $700M To PE, Infrastructure

Pension Manager: Florida State Board of Administration

Assets: $154 billion (Aug. 31, 2012)

Private Equity Assets (Main Pension Fund): $6.5 billion (Aug. 31, 2012)

Private Equity Allocation / Target (Main Pension Fund): 5.2% / 5%

Chief Investment Officer: Ash Williams

The Florida State Board of Administration, which oversees $154 billion in pension and emergency funds, committed $700 million to five private equity, infrastructure and opportunistic debt funds during the third quarter of 2012, according to spokesman John Kuczwanski.

Overall, Florida has 5.2 percent, or $6.5 billion, of its main pension’s assets in invested private equity capital. The target is 5 percent.

The largest of the new commitments was a $200 million pledge to Carlyle Partners VI LP, the newest flagship vehicle from The Carlyle Group, one of the largest funds in the market with a target of $10 billion. Fund VI so far has garnered more than $2.8 billion in commitments, according to a Securities and Exchange Commission filing. Another pension that has made a pledge to Fund VI is the Texas County & District Retirement System, which committed $75 million.

Florida earlier backed the 2007-vintage Fund V with a $200 million pledge. That fund is so far returning an IRR of 9 percent, according to Florida data from June 2012. Florida also contributed to Carlyle Partners Funds II, III and IV and a pair of the firm’s Asia and Europe-focused funds.

The sunshine state’s main pension body also committed $150 million to Global Infrastructure Partners II LP, a sophomore fund that blew past its initial $5 billion target, ultimately raising $8.25 billion upon its final close this month. Global Infrastructure Partners is perhaps best known for owning major stakes in London’s Gatwick and City airports. Overall, infrastructure investing has gained increasing credibility among investors since it is seen as being less correlated with volatile stock markets, and less impacted by inflation.

GIP II also received commitments from the California Public Employees’ Retirement System and the Washington State Investment Board, both of which pledged $250 million and the Virginia Retirement System and the Oregon Investment Council, each of which pledged $150 million. Other pensions that committed lesser amounts included the New Mexico State Investment Council and the Maine Public Employees Retirement System.

As of March 2012, the firm’s 2008-vintage debut fund was returning an IRR of 6.5 percent and a 1.5x return multiple, according to March 2012 data from MainePERS and the San Diego County Employees Retirement Association.

Another $150 million commitment was made to the Wayzata Opportunities Fund III LP, a mid-market buyout and distressed debt fund. The fund, which has a $2.5 billion target, is run by Wayzata Investment Partners, a Minnesota-based firm. The fund has so far received $150 million commitments from both the Minnesota State Board of Investment and the Massachusetts Pension Reserves Investment Management Board. Other commitments include $100 million from the Los Angeles County Employees Retirement Association, $75 million from the Texas County & District Retirement System and $50 million from the Kentucky Retirement System.

According to March 2012 data from CalPERS, Wayzata’s previous fund, the 2008-vintage Fund II, was producing an IRR of 16 percent along with a 2x investment multiple.

Florida made a $100 million pledge to Oaktree Opportunities Fund IX LP, the newest flagship fund from Oaktree Capital Management, the Los Angeles based debt specialist. That fund, which has a $4 billion target, has garnered significant interest among pension, including a $400 million commitment from the Washington State Investment Board, a $175 million commitment from the Massachusetts Pension Reserves Investment Management Board, $100 million each from the Illinois Teachers’ Retirement System and the Los Angeles County Employees’ Retirement Association, and $75 million each from the California State Teachers’ Retirement System and the Kentucky Teachers’ Retirement System. The prior fund in the series, Fund VIII, closed in 2011, so data is too new to have any significant meaning.

Finally, Florida pledged $100 million to Falcon Strategic Partners IV LP, the newest fund from Falcon Investment Advisors, the Boston-based mezzanine specialist. The fund is targeting $850 million. Another investor that has committed to Fund IV is the Louisiana State University Foundation, which pledged $50 million.

The previous fund in the series, the 2009-vintage Fund III, has so far produced an investment multiple of 1.3x, according to March 2012 data from the New York State Common Retirement Fund.