Florida commits more than $200m to private equity

The $128bn pension system’s private equity portfolio soared in fiscal 2011, according to preliminary numbers.

Florida State Board of Administration committed more than $200 million to private equity in the second quarter and revealed this week that its private equity programme generated a preliminary return of 18.2 percent for fiscal 2011.

Florida committed $50 million to Fairview Special Opportunities Fund, which according to fundraising documents with the US Securities and Exchange Commission was targeting $50 million; €40 million to Montagu’s fourth fund, which closed in April on €2.5 billion; $75 million to ABRY Partners’ $1.6 billion seventh fund and $150 million to ABRY’s second Advanced Securities Fund and $50 million to Berkshire’s eighth fund, which closed this month on $4.5 billion.

Preliminary numbers show the pension system’s private equity programme returned 18.2 percent in fiscal 2011 and its real estate programme generated returns of 18.6 percent. Overall, the pension system scored a preliminary 22 percent return for the year, beating its benchmark and boosting total market value to $128 billion, about $20 billion above the 2010 final tally.

The solid returns are a result of “staying the course” and “being able to use strong partnerships to take advantage of market opportunities”, chief investment officer Ash Williams said. “The fiscal year-end figure represents a rebound of more than $54 billion from the recent low of $83.3 billion just 27 months earlier.”

The system has a 4 percent target to private equity, with a policy range of up to 7 percent, and an actual allocation of 4.3 percent. It has a 7 percent target to real estate and a 6.4 percent actual allocation.

If the preliminary numbers stand, Florida’s solid private equity returns would be similar to other US pensions that have posted big wins for fiscal 2011. The California Public Employees’ Retirement System revealed preliminary numbers this month showing its Alternative Investment Management programme yielded a 25.3 percent return.

The California State Teachers’ Retirement System’s private equity portfolio posted a 22.5 percent return; the New York State Common Retirement Fund posted an 18.9 percent return in private equity, while the Maryland Retirement System showed a 24.4 percent return.