System: Florida State Board of Administration
Assets Managed: $153 Billion (Oct. 31, 2012)
PE Assets Managed (Main Pension): $6.5 Billion
PE Allocation Target (Main Pension): 5.1% (5.0%)
Chief Investment Officer: Ash Williams
The pace of new private equity and alternative investments at the Florida State Board of Administration is likely to reach about $6 billion in fiscal 2012-2013, as Florida’s primary $126 billion pension fund gradually ramps up its allocations to so-called strategic investments from zero to 11 percent of the portfolio, according to John Kuczwanski, an SBA spokesman.
Florida last year received expanded authority from the state legislature to significantly boost its allocations to strategic investments and modestly increase commitments to private equity. Overall, the Florida SBA oversees $153 billion in state pension and emergency money as of Oct. 2012.
Strategic investments, which Florida defines as everything from private debt funds, mezzanine funds and hedge funds to infrastructure funds and forest land, could see $3.7 billion in new commitments by the time fiscal year 2012-2013 ends in June. The Florida pension fund’s current allocation to strategic investments is 5.1 percent, or $6.4 billion, far shy of its 11 percent target, indicating that there is a lot of room for new commitments in the years ahead.
And in private equity, which saw its target allocation increased under the new policy to 5 percent from 4 percent, is expected to see $2.3 billion in new commitments by the time the current fiscal year is done. Currently, the Florida pension fund’s private equity allocation is 5.1 percent, or $6.5 billion in invested private equity capital, slightly above the pension’s 5 percent target.
Kuczwanski was keen to emphasize that there are many factors that the board takes into account when it makes commitments, including the performance of the public markets and the specific funds that are available in any given year.
In the most recent quarter, the state invested $1.36 billion in private equity, infrastructure and debt strategies, according to a report from Florida SBA. Its private equity commitments included five commitments of roughly $100 million each, including Advent International’s Advent International Global Private Equity VII LP, which just closed having raised $10.8 billion, well above its initial $9 billion target. Another pledge was to the new flagship fund from Silver Lake Partners, Silver Lake Partners IV LP, a technology-focused private equity fund that has a $7.5 billion target.
Florida is also committing $100 million to Lexington Partners’s Lexington Middle Market Investors III LP, a middle market secondary fund seeking to raise $750 million. Another $100 million commitment will be to EnerVest’s EnerVest Energy Institutional Fund XIII LP. EnerVest, a Houston-based firm that operates more than 26,000 oil and natural gas wells, has a $2 billion target for the fund. A final commitment to the pension’s energy-related private equity holdings includes $100 million to Houston-based Energy Capital Partners’ latest fund, EnCap Energy Capital Fund IX LP, a new fund seeking to raise $5 billion.
Within the strategic investment allocation, Florida’s main pension fund contributed $400 million to infrastructure related vehicles, including $300 million to Industry Funds Management Global Infrastructure Fund LP, a Melbourne-based fund. IFM, as the firm is better known, oversees $34 billion in assets, according to the firm’s Web site. Also in the infrastructure arena, Florida pledged $100 million to RK Capital Partners’ Red Kite Mine Finance Fund II LP, a mine financing fund that is seeking to raise $750 million overall.
Finally, Florida was very active in the private debt and credit fund area, investing $460 million across three funds. Those commitments included $200 million to GSO Capital Solutions Fund II LP, an opportunistic debt fund operated by The Blackstone Group’s main credit unit that is seeking to raise $3.25 billion. Also receiving $200 million from Florida was the CarVal Investors Credit Value Fund II LP, a fund founded by a financial subsidiary of Cargill, the Minnesota-based food and agricultural giant. Finally, Florida made a $60 million pledge to ABRY Senior Equity IV LP, a debt-related fund from ABRY Partners, the Boston-based private debt firm.