Florida to put up to $6 billion in alternatives

Date: Thursday, September 22, 2011
Author: Barry Burr, Pensions & Investments

Florida State Board of Administration, Tallahassee, is searching for managers to run up to $6 billion in private equity, hedge funds, real estate, commodities and infrastructure, Kevin SigRist, deputy executive director, said at its investment advisory council meeting.

Managers will be recommended to the $155.3 billion board by strategic investment consultant Cambridge Associates, private equity consultant Hamilton Lane, infrastructure consultant Mercer and real estate consultant Townsend Group. No RFPs will be issued, John Kuczwanski, FSBA communications manager, said in an e-mail.

Managers may ask to be included in the searches; instructions for doing so are available at FSBA's website.

The board disclosed the moves at a meeting on Monday.

In strategic investments, including hedge funds, debt-oriented funds and other alternative investments and strategies, FSBA plans to commit $2 billion to $2.5 billion over the next year.

In hedge funds, the board is searching for equity-oriented managers to run up to a total of $800 million over the next year, focusing on absolute return and long-short strategies.

Cambridge is assisting on the hedge fund and commodities searches. The allocation for commodities and infrastructure managers wasn't available.

In private equity, the board is searching for venture capital and other private equity firms to commit up to a total of $2.5 billion over the next three years.

The board expects to commit some of the private equity allocation to existing relationships, although an amount hasn't been announced.

There is “a capital scarcity in the market” for private equity, Mr. SigRist said at the meeting. “So we are able to get access to funds that in the past didn't talk to us.”

“With endowments and foundations being less active in venture capital fundraising, the SBA is finding new opportunities with first-tier venture capital funds,” Mr. SigRist added in a statement.

In real estate, FSBA plans to commit a combined $1 billion over the next one to two years to funds and direct-owned property.

Along with Townsend's assistance in finding real estate funds, the board's real estate investment advisers — Invesco Realty, Heitman, L&B Realty and Prudential Real Estate Investors — are searching for direct-owned properties.

Funding for the all the commitments in the asset classes will come from liquidity, helping FSBA get closer to its allocation targets, Mr. Kuczwanski said in the e-mail.