Florida SBA to build out dedicated PE co-investment programme

The $235bn pension system plans to scale direct investing with both existing and new GP relationships.

Florida State Board of Administration, one of the US’s largest investors in private equity, is set to build out an internal co-investment programme and has named a senior executive as head of the strategy.

Setting up a dedicated co-investment programme is one of the $235 billion pension system’s key goals for the upcoming year, per materials prepared for its investment committee meeting on Tuesday.

“Going forward, we expect to increase co-investments and evaluate future opportunities as they arise… We are going to scale up what we have been doing since 2016,” John Bradley, senior investment officer for private equity at Florida SBA, told Private Equity International. Bradley noted that this will mean doing more co-investments with both existing GPs and GPs outside its roster.

Wes Bradle, a senior portfolio manager for private equity at the pension, was appointed head of co-investments as of July, according to his LinkedIn profile which notes he will lead sourcing, diligence and monitoring of the programme.

It is unclear how Florida SBA expects to grow its co-investment programme, or whether additional resources and staff will be committed to support this move. Bradley did not provide further details on the approach.

Florida SBA has made co-investments alongside its GPs since 2016 and the strategy has been part of SBA’s PE programme since 1998, Bradley told PEI.

The pension has a 6 percent target allocation to private equity, according to its 2021-22 annual investment report. It has about $22.3 billion in private equity, representing 9.5 percent of total assets as of June this year, PEI data shows.

Florida SBA is considering increasing its target to private equity by 4 percentage points. The recommended 10 percent target exposure to private equity is part of an overhaul of Florida state’s asset allocation strategy, affiliate title Buyouts reported in June. The state is expected to increase Florida SBA’s allocation to alternative investments to 30 percent, from 20 percent currently.

Its PE portfolio consists of 224 funds across 69 GPs, according to a June presentation. Recent fund commitments by Florida SBA include $600 million to Lexington Co-Investment Partners VI, $200 million to Asia Alternatives FL Investor IV and $100 million to TowerBrook Investors VI, according to PEI data.

The pension’s PE portfolio delivered a 25 percent one-year return for the period ending 30 June 2022 – the highest for all asset classes.

Florida SBA’s direct investing move is in line with institutional investors’ push towards direct investing in recent years. The $261 billion New York City Retirement System launched its co-investment programme in mid-2021 and had an initial $500 million for the strategy to be deployed over two to four years, PEI reported previously. Last year, Connecticut Retirement Plans and Trust Funds closed on roughly $1.3 billion of co-investment mandates with HarbourVest Partners and Morgan Stanley Investment Management.

– Adam Le contributed to this report.