The Florida State Board of Administration plans to up its private equity commitment level for the upcoming fiscal year ending 30 June 2018, but it remains below the peaks reached a few years earlier.
SBA expects to make $1.78 billion in private equity, which includes buyout funds, buyout co-investments, venture capital, distressed and secondaries, for the upcoming 2017-18 fiscal year starting 1 July, according to materials for its 5 June meeting.
SBA was slightly overweight to private equity, according to its most recent performance report. As of 31 March, SBA had 6.3 percent of its $9.21 billion assets in private equity, above its 6 percent target allocation.
The projected amount for the upcoming fiscal year is 36 percent above the $1.31 billion that the Tallahassee-based pension committed to 20 funds in the 2016 fiscal year. However, it remains below the commitment levels that hovered around $2 billion in 2013, 2014 and 2015.
“The amounts presented are pacing amounts to keep the asset class at its target weight,” an SBA spokesman told Private Equity International.
The projected amount consists of $1.33 billion to buyout funds, $200 million to buyout co-investments, $130 million to venture capital and $125 million to distressed – with no allotment for secondaries, according to the materials.
Although SBA does not have specific target allocations for the sub-asset classes within private equity, those strategies are kept at certain levels to maintain intra-asset class diversification, the spokesman said. Referring to secondaries specifically, he noted private equity overall is an opportunistic asset class and SBA could make commitments if an attractive opportunity is present.
For the next three fiscal years, SBA expects to make a total of $5.28 billion to private equity, 67 percent of which will go towards buyouts – both funds and co-investments – 10 percent to venture capital, 13 percent to distressed and 10 percent to secondaries, the materials showed. It is slightly below the $5.47 billion SBA actually committed in the past three years.
The materials also noted that these estimated pacing numbers are in line with the private equity target allocation.
In earlier meetings, SBA had mulled direct investing in private equity but did not move forward with it due to concerns about necessary resources to pursue the strategy, as reported by PEI.
Recent SBA commitments to private equity funds include $150 million to Audax Mezzanine Fund IV, $150 million to Thoma Bravo Fund XII and € 50 million to Investindustrial Fund VI, according to PEI data.