Florida SBA moves closer to hiking PE target

Florida State Board of Administration is one step closer to increasing its target to private equity and making other tweaks that could increase how much the system allocates to the asset class.

The proposed asset allocation changes and a newly enacted Florida state law could inject badly needed liquidity into a private equity ecosystem starved for capital as LPs reconfigure their strategies and exit activity remains slow.

Florida SBA’s investment advisory committee, which manages the state’s $180.4 billion pension, will hike its private equity target to 10 percent from 6 percent.

The committee’s recommended changes were approved at its June 27 meeting, a spokesperson confirmed. The full Florida SBA board must approve the new asset allocation at its August meeting before the changes are made official, according to the spokesperson.

The system is also considering other tweaks to its asset allocation mix that could allow for more commitments to private equity. These proposed changes piggyback a newly enacted state law that allows Florida SBA to allocate up to 30 percent of the state’s pension to alternative investments, up from 20 percent.

Florida considers alternative investments as private equity and a “strategic investment” asset class comprised of hedge funds, infrastructure and private debt. The pending allocation changes would reduce the 12 percent target for strategic investments to 4 percent.

A new active credit strategy, comprised of both public and private credit investments, would have a 7 percent target and replace much of the reduction to strategic investments.

The private equity, strategic investments and active credit asset classes would have a combined target of 21 percent, still below the new maximum cap of 30 percent to alternatives.