Florida SBA buys stake in Providence Equity

The $126bn pension has purchased a minority stake in Providence Equity Partners alongside another of the firm’s LPs. The two LPs together will own less than a 10% stake in the firm.

The Florida State Board of Investment has purchased a minority interest in Providence Equity Partners, according to a source with knowledge of the situation.
 
Providence recently sent a letter to investors stating that two of the pension’s “longstanding limited partners” recently purchased a minority stake of less than 10 percent in “Providence’s management company and related entities”.
 
The letter did not specify which LPs were backing the firm, but the second investor is thought to be a sovereign wealth fund, according to Fortune, which first reported the investment in Providence.

We intend to use the proceeds for a number of growth-oriented initiatives over time, including investing in current and future Providence funds and further developing our firm’s capabilities globally

Providence Equity Partners


 
“We intend to use the proceeds for a number of growth-oriented initiatives over time, including investing in current and future Providence funds and further developing our firm’s capabilities globally,” Providence said in the letter. “Private equity remains our core focus, with measured expansion of our capital markets business.”
 
The investment is not the first time Florida has made a unique acquisition of an ownership stake in a general partner. The $126 billion pension previously invested about $44 million in secondary firm Lexington Partners in 2010.
 
Florida is an investor in Providence’s sixth buyout fund, a 2007 vintage that collected $12.1 billion, according to data provider Private Equity Connect.
 
Providence is in the market raising its seventh fund, which is targeting $6 billion. Some market sources questioned whether the firm would be able to hit its target on the new vehicle, given what they saw as underperformance of the firm's more recent, and larger, funds. However, Providencehas raised between $4 billion and $4.5 billion and is expected to hold a final close before the end of the year, according to a source with knowledge of the situation.

In March, Florida appointed veteran investment officer Trent Webster to the role of senior investment officer – strategic investments and private equity – and portfolio manager John Bradley to the newly created position of director of private equity. Bradley reports to Webster, a Florida SBA spokesperson previously told Private Equity International.
 
The pair replaced Florida’s former head of private equity Jim Treanor, who left in 2011 to join Minnesota-based institutional investor advisor Jeffrey Slocum & Associates, where he focuses on hedge fund strategies.