Florida pension doubles alternatives allocation

The state’s legislature has increased the Florida State Board of Administration’s allowable allocation to private equity and venture capital from 5 percent to 10 percent. The pension fund is also launching an infrastructure platform.

The Florida State Board of Administration (FSBA), manager of the $129 billion (€81 billion) Florida Retirement System, has doubled to 10 percent its allocation to private equity and other alternative assets.

The change was one the pension has been pushing for some time, a spokesman said. It was packaged with legislation seeking to encourage investment in Florida-based businesses. Passed earlier this week, the legislation calls for FSBA, which has roughly $2.3 billion invested in Florida companies, to devote 1.5 percent of its portfolio to in-state technology and growth businesses.

To meet that allocation, FSBA is planning to expand its existing Florida-oriented venture capital fund of funds program, as well as to develop a merchant banking relationship to provide debt and equity financing to Florida businesses.

Private equity and venture capital fund commitments comprised roughly 3.2 percent of FSBA investments last year. The pension’s private equity allocation has averaged a return of 12.39 percent over the last three years.

In related news, FSBA is planning to launch dedicated infrastructure, timber and corporate governance platforms, the spokesman confirmed. The board of directors is considering committing between $250 million to $750 million in infrastructure and $100 million to $350 million in timber. The FSBA is currently weighing private consultants for those platforms.