The Florida State Board of Administration intends to extend its geographic reach, in part by forming relationships with international managers not currently in the portfolio.
A presentation made in June to the Florida State Board of Administration by Hamilton Lane, the limited partner’s private equity adviser, noted that the strategic objectives for the private equity program are to position the LP as a preferred investor within the alternative investments marketplace and to maximize access to global investment opportunities.
Next steps for the program include continuing to assess opportunities to build out the portfolio’s international exposure; continuing to establish captive specialized separate accounts, including those that concentrate on debt and on Asia; continuing to build relationships with high-quality domestic and international managers not currently in the portfolio; and making strategic investments in infrastructure, distressed and mezzanine opportunities, and debt funds.
According to the report, the LP made more than $1.8 billion in private equity commitments in 2008 to 19 partnerships, including nine new relationships.
About three-quarters of the private equity portfolio is committed to buyout managers, with the rest divided evenly between venture capital and special situations. The LP’s increased overall commitment pace in 2008 is attributable, the presentation noted, in part to special situation and mezzanine fund commitments, which composed 44 percent of total commitments made in 2008; Hamilton Lane intends to continue assessing those types of opportunities with top-tier managers in Europe.
In other news, in late June, the state launched its Florida Growth Fund, which allows the LP to invest up to 1.5 percent of the Florida Retirement System Pension Fund’s assets in technology and growth enterprises that have a significant presence in Florida, including space technology, aerospace and aviation engineering, computer technology, renewable energy, and medical and life sciences. Investments options available to the LP include venture capital funds, growth capital, mezzanine debt and co-investments.
The Florida Growth Fund will have the ability to invest $250 million of capital. Hamilton Lane will manage the effort, opening a Florida office to support the project, and will create a dedicated Web site to field inquiries, proposals and requests. The new Web site, www.floridagrowthfund.com, is now under construction.
The Florida State Board of Administration manages more than $120 billion in assets for several state and local funds and endowments. Regarding its private equity program, as of May 31, the actual allocation was 3.6 percent, with a target allocation of 3.9 percent and a range of zero to 5 percent. Pledges made in 2009 have gone to Freeman Spogli Equity Partners VI; Hellman & Friedman VII; Charterhouse Capital IX; Wellspring Capital Partners V; Paul Capital Top Tier Special Opportunities; Falcon Strategic Partners III; Riverside Capital Appreciation V; and Lexington Cap Partners VII, according to Dennis MacKee, spokesperson.