Florida’s New PE Team Makes First Series of Commitments

Pension System: Florida State Board of Administration

Assets Managed Overall: $158 billion (Feb. 29, 2012)

Assets Managed (Main Pension): $126 billion (Feb. 29, 2012)

Private Equity Allocation (Main Pension): $5.9 billion (4.7%)

Private Equity Target (Main Pension): 5%

Executive Director & Chief Investment Officer: Ash Williams

The Florida State Board of Administration made its first series of private equity commitments under Trent Webster, its new senior investment officer for private equity and his deputy, John Bradley. The SBA, which manages $157 billion in pension and emergency funds, said it committed $500 million to three buyout funds and another $300 million to a private equity real estate fund. In March, Webster was named to replace Jim Treanor, who left in 2011 to move to the private sector.

All four commitments were for Florida’s main pension plan, the $126 billion Florida Retirement System, which has 4.7 percent of its assets, or $5.9 billion, in invested private equity capital. The pension’s private equity target is 5 percent.

One of the three buyout commitments was a pledge of $200 million to the latest fund from Leonard Green & Partners, Green Equity Investors VI LP, a fund that has already exceeded its original $5 billion target, according to recent press reports. Los Angeles-based Leonard Green is known for making investments in prominent retailers such as Neiman Marcus, Whole Foods, Rite-Aid, Sports Authority, Petco and BJ’s Wholesale.

Fund VI is Florida’s fourth commitment to Leonard Green, with the pension committing $60 million to Fund III, $100 million to Fund IV and $100 million to Fund V.

Leonard Green’s latest fund has been popular among the nation’s public pension systems. The fund has already secured commitments from such major U.S. pensions as the Washington State Investment Board, New York State Common Retirement Fund, the New York City Bureau of Asset Management, the Wisconsin Investment Board, the Illinois Teachers’ Retirement System and the New Mexico State Investment Council, among others.

Green’s previous fund, the 2007-vintage Fund V, has so far returned an IRR of 14 percent, according to Florida’s latest return data from Dec. 31, 2011. While Florida did not provide return multiples, September data from the Oregon Investment Council put the return multiple of Fund V at 1.3x.

Florida also committed $200 million to Platinum Equity Partners’s Platinum Equity Capital Partners III LP, a fund with a $3.75 billion target. The fund’s strategy is to invest mainly in Europe and the U.S., to buy underperforming businesses and execute turnarounds.

Other investors in Platinum’s latest fund include the Pennsylvania Public School Employees’ Retirement System, which committed $200 million to the fund earlier this year.

This is the third Platinum fund for Florida, which invested $50 million in Fund I and $75 million in Fund II. That last fund, which closed in 2007, has returned an IRR of 9 percent and has delivered a 1.4x return multiple, according to Pennsylvania PSERS.

The third buyout fund Florida committed to was Thoma Bravo’s latest, Thoma Bravo X LP, which closed recently, having raised $1.25 billion. Florida committed $100 million.

Chicago-based Thoma Bravo invests mainly in mid-market companies. Investors in Fund X include the San Francisco Employees Retirement System and the Massachusetts Pension Reserves Asset Management Board.

Florida invested $50 million in Fund IX, which closed in 2009. That fund, which raised $823 million has garnered an 30 percent IRR, according to the Florida data.

Finally, Florida invested $300 million in The Blackstone Group’s latest real estate private equity fund, Blackstone Real Estate Partners VII LP. That fund, which has so far raised $10 billion, reached its initial target.

Other investors in Fund VII include the Virginia Retirement System, the Wisconsin Investment Board and the University of Texas Investment Management Corp.