The Florida State Board of Administration (SBA) is looking for managers to run up to $6 billion in mandates as it expands its allocations to alternative assets such as private equity, hedge funds, real estate, infrastructure and commodities.
The increase in its alternative assets was detailed by SBA deputy executive director Kevin SigRist at the fund’s latest investment advisory council meeting earlier in the month.
The fund could look to place up to $2.5 billion in private equity mandates in the next few years, SigRist said.
“We are thinking that we are going to have $2 billion to $2.5 billion worth of commitments on average for private equity over the next several years,” he told the committee.
“But this will depend on when specific funds are coming back to market and the timing around closing.”
SBA has more than $152 billion in assets under management and will use private equity consultants Hamilton Lane, strategic investment consultants Cambridge Associates, real estate consultants Townsend Group and infrastructure consultants Mercer to recommend managers.
In private equity, SigRist said the fund is looking to take advantage of what he describes as continuing “capital scarcity” in the marketplace, to access private equity funds “that in the past really didn’t need to be talking with us”.
The fund will also look at expanding its venture capital and growth capital initiatives.
SigRist told the committee the fund is also getting advice on its legacy private equity investments to identify where there is a drag on the overall performance of the private equity portfolio.
He said the fund was also looking at a timberland investment this year, was interested in commodity fund-of-funds opportunities and was also looking at an infrastructure fund.
“We think we have a good chance of getting some exposure to real asset strategies this year,” he told the committee.
SigRist said that the fund will look to commit between $2 billion and $2.5 billion in what he calls strategic investments such as hedge fund strategies, debt-orientated funds and other alternatives strategies over the next year.
“On the strategic investments side, there the primary focus will be on equity-orientated hedge funds – absolute return and equity long/short,” he said.
SBA executive director and chief investment officer Ashbel “Ash” Williams (pictured) is a former hedge fund manager who was hired in 2008 from New York-based Fir Tree Partners.
The fund will also look for real estate debt funds and is looking to continue its relationship with a mezzanine debt fund manager, SigRist said.
In terms of real estate, the fund is looking at direct ownership, real estate funds and joint venture projects.
“We would see up to the $1 billion playing out over the next 12 to 24 months in real estate would be in the fund side,” he said.
The fund will also work with Townsend to research more opportunities in foreign real estate.
“We are going to start to look more strenuously and more strategically with Townsend on more foreign-focused real estate funds,” SigRist said.
