Florida SBA in Q3 committed $925 mln to private markets

  • 6 pct target allocation to PE; actual 7 pct
  • 3 PE commitments to managers system had previously backed
  • Biggest pledge: Hellman & Friedman IX, which closed on $16 bln

Florida State Board of Administration in the third quarter committed $925 million to private-markets strategies, selecting two buyout funds, one secondary strategy, two debt funds and a commodities fund.

In buyouts, Florida SBA committed $250 million to Hellman & Friedman Fund IX, which closed on $16 billion this month, and $150 million to Thoma Bravo Fund XIII. Florida SBA has a 65 percent target for buyouts, and a current exposure of 66 percent.

Florida SBA also committed $200 million to ARDIAN Investment Switzerland’s ASF VIII fund, a secondary strategy. Florida SBA has a 10 percent target for secondaries within its private equity portfolio, with a current allocation of 6 percent.

The SBA is looking to increase our exposure up to our target of 10 percent, spokesman John Kuczwanski said. Secondaries are a diversifier and do help to reduce the PE portfolio’s j-curve.

Florida SBA is also open to selling on the secondaries market, Kuczwanski added.

Florida SBA has opportunistically sold portfolio positions in the past and will continue to do so in the future, Kuczwanski said.

In addition to the private equity commitments, Florida SBA also pledged $325 million to three funds within its strategic-investments portfolio. The state committed $150 million to GSO Capital Partners’ GSO ESOF Fund II, a commodities strategy; $100 million to Gallatin Point Capital for a subordinated capital fund; and $75 million to ICE Canyon’s

ICE EM Credit ABS RE fund, which focuses on evergreen debt.

Gallatin Point and Ice Canyon are new relationships for Florida SBA, while the other four managers have existing relationships through the state’s commitments to previous funds.

Cambridge was consultant for all the new commitments.

Florida SBA, which manages about $204.4 billion in assets, has a 6 percent target to PE, with an actual allocation of 7.1 percent. PE was the strongest performer for Florida SBA in fiscal 2018 ended June 30, generating 17.3 percent returns.

Florida SBA had set a $2 billion pacing target to private equity this year. Buyouts account for two-thirds (66 percent) of the state’s PE portfolio, with venture capital at 16 percent, distressed investments at 12 percent and secondaries at 6 percent.

Action Item: View Florida SBA’s third quarter commitments: https://bit.ly/2P2yTXl

Updated: This article has been updated to include comments from Florida SBA spokesman John Kuczwanski.